It was a year of encouraging progress as well as new developments for Garuda Indonesia in 2009. We completed the turn around phase of our growth roadmap, reaching record levels of achievement in terms of financial and operational performance. We also laid the foundation for greater transparency and professionalism towards sustaining growth in the long-term. And we introduced a new concept of service that reflects the best in Indonesian hospitality at all customer touch points. Services that delight the five senses. The Garuda Indonesia Experience.

touch
Indonesia is also known for its hospitality, capturing the heart of the world and making the country one of world’s most favorite destinations. Many of its traditional dances of greeting are a reflection of a warm welcome and a touch of the famous Indonesian hospitality.
Keramah-tamahan khas Indonesia telah cukup dikenal, menjadikannya salah satu negara tujuan favorit di dunia. Banyak dari tari-tarian tradisional khas daerah merupakan cara untuk mengucapkan selamat datang, dan memberikan sentuhan keramah-tamahan khas Indonesia.

The history of commercial flight in Indonesia cannot be separated from the time of its people struggling to defend the independence of Indonesia.

The history started in 1948, to assist the mobility of the governmental leaders, President Soekarno appealed to entrepreneurs and people of Aceh to gather funds for acquiring an aircraft. Then a sum of money was successfully raised to acquire a Douglas DC-3 Dakota aircraft which was later given a registration RI-001 and named “Seulawah” which means “Gold Mountain”.

Due to a heavy flight schedule, aircraft RI-001 was required to undergo an overhaul overseas, and on December 7, 1948 aircraft RI-001 landed in Calcutta for maintenance. However, during the maintenance in India, on December 19, 1948 the Dutch troops

conducted its second military invasion, so that after the maintenance, aircraft RI-001 was unable to return to Indonesia.

During the same period, the Burmese government needed air transport. In order to cover the company’s operational expenses, the aircraft RI-001 was leased to the Burmese government. Finally, on January 26, 1949 aircraft RI-001 was flown from Calcutta to Rangoon and given the name ”Indonesian Airways”.

The name ”Garuda” was given by President Soekarno himself, quoting a poem in Dutch language, a famous literary work during the time, Noto Soeroto; ”Ik ben Garuda, Vishnoe’s vogel, die zijn vleugels uitslaat hoog boven uw einladen”, which means ”I am Garuda, a bird owned by Wishnu, spreading my wings over your islands”.

On December 28, 1949, a Douglas DC-3 Dakota aircraft with registration PK-DPD and already painted with a logo ”Garuda Indonesian Airways” travelled from Jakarta to Yogyakarta to pick up President Soekarno. This was the first flight using the name ”Garuda Indonesian Airways”.

Garuda Indonesia then formally became a Stateowned Enterprise in 1950, where during that time Garuda Indonesia owned 38 aircraft consisting of 22 aircraft of DC3 type, 8 Catalina sea planes and 8 Convair 240. The fleet continued to grow until 1956 when for the first time, Garuda Indonesia carried passengers of Hajj pilgrims to Mecca. In 1961, Turboprop Lockheed Electras joined the ranks of Garuda Indonesia’s fleet. Garuda Indonesia began its routes to Europe in 1965, with Amsterdam as its final destination.

In the 1980’s, the fleet of Garuda Indonesia and its operational activities experienced a major restructuring that required the company to design a complete training program for its employees and to encourage the company to set up an employee training centre, Garuda Training Centre, located in West Jakarta. In addition, Garuda Indonesia also built an aircraft maintenance facility, the Garuda Maintenance Facility (GMF) at Soekarno-Hatta international airport. In early 1990s, Garuda Indonesia’s long-term strategy was created for up to beyond the year of 2000. Fleet also continued to improve throughout the period. Garuda Indonesia was ranked as the top 30 in the world. Since early 2005, the new management team began to design a plan for the future of Garuda Indonesia. Under this new management, Garuda Indonesia reassessed and restructured its whole organization to improve operational efficiency, rebuilding its financial strength, increasing employee awareness in

understanding their customers, and most importantly to motivate and rejuvenate the spirit of Garuda Indonesia.

For the company, service is a key performance indicator for its operational activities. Strategic indicators that involved restructuring in all of the service-chain underlined the commitment of the company to become a customer-oriented enterprise.

The company restructuring which also included a debt restructuring was a success as reflected in the company profit achieved in 2009 which surpassed Rp 1 trillion. In the debt restructuring framework, the company had a new shareholder as of December 2009, Bank Mandiri, which acquired a 10.6% stake in the company through the completion of Convertible Bonds amounting to Rp 1.02 trillion, thus, as of December 2009 the shareholder structure was Government of Indonesia (85.8%), PT Bank Mandiri (10.6%), PT Angkasa Pura I (1.4%), PT Angkasa Pura II (2.2%)

With offices at the new management building at Soekarno-Hatta International Airport, Garuda Indonesia currently is staffed by 5,075 employees at head office and 43 branch offices. By the end of December 2009, Garuda Indonesia owned 70 aircraft consisting of 3 Boeing 747-400, 6 Airbus 330-300, 4 Airbus 330-200 and 57 Boeing 737 (300, 400, 500 & 800 series). The aircraft travel to more than 50 domestic and international destination routes as well as serving more than 10 million customers.

15 April
Garuda Indonesia memperoleh penghargaan Word of mouth Marketing, penghargaan kepada perusahaan yang produknya paling sering dituturkan. Garuda Indonesia received Word of Mouth Marketing Award, an appreciation given to a company with most popular product.

10 Desember
Direktur Utama Garuda Indonesia Emirsyah Satar menerima penghargaan Markerter of the Year dari Markplus di Ritz Carlton. The President & CEO of Garuda Indonesia, Emirsyah Satar received the Marketer of the Year award from Markplus at Ritz Carlton.

11. Airline of The Year 2009, The Best Cabin Crew, The Best On Time Performance, dari Majalah Angkasa. Airline of The Year 2009, The Best Cabin Crew, The Best On Time Performance from Angkasa Magazine.

06. Best of The Best CEO 2009, dari Majalah Warta Ekonomi, Agustus 2009 Best of The Best CEO 2009, from Warta Ekonomi Magazine, August 2009

07. Indonesia’s Most Admired Companies (IMAC) Award 2009: The Best in Building and Managing Corporate Image, dari Frontier Consulting dan Majalah Business Week, Agustus 2009 Indonesia’s Most Admired Companies (IMAC) Award 2009: The Best in Building and Managing Corporate Image, from Frontier Consulting and Business Week Magazine, August 2009

The year 2009 was the last year of implementation of “turnaround” strategy which was started in 2008. During 2009, all units within the organization and the management had been prepared to become an effective organization with focus on debt restructuring, product and services enhancement, and IPO preparation. This strategy was then translated into several initiatives carried out during the year, including the launching of new service concept “Garuda Indonesia Experience” and the purchase of a brand new fleet. These two initiatives had successfully improved the image of Garuda Indonesia as the leading carrier with a similar reputation to foreign carriers. Combined with improvement in network and revenue management, the result was a relatively solid operating revenue compared with a poor performance recorded by other carriers due to global crisis.

Meanwhile, initiatives to improve efficiency had consistently been carried out internally to bring continuous improvement in the organization which in turn could affect the performance of the whole organization. The spirit to deliver the best to the Company had also been continuously enhanced to create strong corporate culture, which would lead to an effective and high performance organization.

Coupled with the successful debt restructuring, this general strategy allowed Garuda Indonesia to book a net profit of Rp 1 trillion in 2009, an increase from Rp 975 billion in 2008. This made the year 2009 as the third consecutive years of profit since the consolidation program initiated in 2006. With the completion of the turnaround strategy, Garuda Indonesia is ready to enter into the next phase of the strategy, “Quantum Leap” in 2014.

2006-2010+ Corporate Strategy The Corporate Goal and Targets were formulated in the 2006-2010+ planned strategies, consisting of clearly laid out phases to achieve yearly targets and regain meaningful growth.

Survival The first phase is survival in the competitive and aggressive aviation industry. The Company was successful in implementing its consolidation strategy in 2006 and rehabilitation strategy in 2007, booking satisfactory results both years. In the first phase, the operational and management activities were rearranged, enabling us to provide on-time flights with service excellence. Our business processes were rearranged to create a completely positive airline. Turn around In the second phase or ‘turn around’ which commenced in 2008, the entire organization and management were restructured to become a more effective organization by focusing on debt restructuring, product and service

improvements as well as preparations to privatize through an Initial Public Offering (IPO) to direct the Company for comparable growth compared with other international airlines. After suffering losses for three consecutive years, in 2007 Garuda Indonesia managed to gain profits, laying the foundation for future growth.

The Company’s 2008 Strategic Themes were: 1. Financial Restructuring. 2. Revenue Enhancement. 3. Operational Efficiency. 4. Consistency of Products and Services. 5. Network Intensification. In 2009, strategies in the second phase were sustained with the following focus: • Domestic/regional competitiveness & expansion. • Effective privatization. Growth The third phase, Growth, capitalize on the previous efforts through the privatization program. The program will be accomplished through an Initial Public Offering (IPO) that will project the Company into sustainable growth in 2010 and the following years.

The Company’s operations and business will be further refined to expand our network to increasingly wider destinations around the world to realize its corporate goal: to be a leading airline with a comparable reputation to other world class airlines.

Strategy Map In the translation of the Corporate Strategy from intangible assets to tangible assets and defining the links among our strategic targets, the Company has developed a Strategy Map, which is divided into Learning & Growth, Process, Customers and Financial Perspectives.

Wildly Important Goals (WIGs) Management uses the dynamic ‘Wildly Important Goals’ (WIGs) program to focus the Company’s management processes. It is directed towards the enhancement of three goals: profit, service and on-time performance/OTP.

WIGs are described in the chart above, consisting of the framework and goals that should be prioritized.

More precisely, WIGs are expected to promote a culture of execution throughout all levels of the Company to achieve common goals.

During the challenging global economy in 2009, Garuda Indonesia was able to perform exceptionally well and recorded a 4.5% increase in net profit to Rp 1.02 trillion compared to that in 2008. This achievement reflected the success of the Board of Directors in implementing the right strategy.

In line with the Company’s Strategic Plan launched in 2006, the year 2009 had been targeted as the final stage of a turn around strategy commenced in 2008 by focusing on improvement in domestic/regional competitiveness and expansion.

As part of the initiatives carried out at this stage was a completion of the Company’s debt restructuring. We recognized serious efforts from all Directors to reduce non-current liabilities to Rp 5.2 trillion by year end 2009. The Company also managed to close several deals, one of which was the restructuring of Rp 1 trillion Convertible Debt with Bank Mandiri. We highly appreciated the Board of Directors for this achievement especially as the restructuring was awarded “Best Debt Restructuring Deal of The Year 2009 in South East Asia” by Publisher South Asia (Hong Kong). The achievement should provide a strong foundation and comfort for Garuda Indonesia in executing its plan for the Initial Public Offering (IPO), scheduled in 2010.

Some initiatives being imposed in 2009 to generate profitable growth resulted in a substantial improvement and positive development to the Company. From a services perspective, we support the Directors’ program in advancing services through the launching of the new concept called “Garuda Indonesia Experience”. The concept, which has been developed based on Indonesian distinctive hospitality, was believed could strengthen the Company’s position in the domestic and international

airline industry as well as provided a unique value to differentiate Garuda Indonesia from its competitors. The “Corporate identity brand refresh” program and the arrival of new aircraft with a new livery reflecting the “brand refresh” concept has enhanced the reputation of Garuda Indonesia as a world-class airline. Meanwhile, in line with high commitment to provide the best for the customers to reflect the FLY-HI values as well as to promote higher efficiency, the relocation of the headquarters to a new premises with an “eco building” concept located close to the Soekarno-Hatta Airport, will place Garuda Indonesia ahead of its competitors in the more stringent competition in the airline industry.

Good Corporate Governance We acknowledge the Directors’ high commitment to implement Good Corporate Governance (GCG). It actually started in 2003 as evident by the signing of “Joint Commitment Declaration” by Commissioners, Directors and Team Leaders on April 1, 2003 as well as the launching of “Commissioners and Directors Charter”. This charter has provided guidance for the working environment framework between the Board of Commissioners and the Board of Directors, and clarified the accountability principle, responsibilities and independency in implementing GCG at the level of Directors, Commissioners and Committees in compliance to advanced GCG. Meanwhile, we also notice a strong willingness of the Directors to support committees responsible to the Board of Commissioners such as the Audit Committee, Corporate Governance Committee and Risk Management Committee. All Committees excellently performed their duties in 2009, contributing to a significant improvement in implementation of good corporate governance. This GCG will be consistently implemented and improved in the future through corporate culture enhancement in compliance with the established code of conduct and business ethics. Additionally, we will continue to perform and strengthen our supervisory function and enrich the functions of all committees under the Board of Commissioners’ supervision in order to maintain trust from the shareholders and other stakeholders.

In anticipating a more complex business environment in the future, we witnessed some efforts in preparation for advanced risk management through establishment of “Enterprise Risk Management” or the ERM project, which starting in 2010, will be a separate unit within the organization. We expect a more conducive global economy in 2010, which will provide a positive outlook and prospect for the Company. Moreover, the exclusion of Garuda Indonesia from a list of banned airlines in the European sky has widened opportunities for Garuda Indonesia to execute the plan to develop international flight networking. Reopening services to Amsterdam starting June 1, 2010 is expected to be the gateway to heighten the Company’s profile in the international community.

We nonetheless recognize tighter competition in the future to be a significant challenge especially through aggressive market penetration by overseas airlines as well as rapid growth in domestic “low cost carriers”. We however remain confident that the implementation of the robust corporate strategy, which is going to continue into the future, will keep Garuda Indonesia one step ahead of the competition, enabling the quantum leap by 2014. In short, on behalf of the Board of Commissioners, I would like to extend gratitude to the shareholders for continued support, to the management and all staff for the extraordinary achievement, to customers, business partners and other stakeholders for their loyalty to Garuda Indonesia. We hope to continue and improve our beneficial relationships in the future to materialize the Company’s vision to become a strong distinguished airline through providing quality services to serve people around the world with Indonesian hospitality.

The solid teamwork forged in years of striving together towards a shared goal has resulted in new levels of achievement for Garuda Indonesia and higher standards of service excellence for our customers.

Year 2009 was a difficult period for the airline industry due to the severe impact from the global economic crisis. The global airline industry encountered extreme volatility in jet fuel pricing, a sizeable decline in demand both from passenger and for cargo as well as a significant decline of 14% in yield for passenger and cargo. These conditions led to a 15% deterioration in the global airline revenues, which in turn brought a net loss of around US$ 9.4 billion to the industry. The International Air Transport Association (IATA) reported 26 airlines went bankrupt in 2009, forcing them to close down their operations.

During this unfavorable global condition, Garuda Indonesia continued execution of the Company strategic plan 2006 – 2010, whereby in 2009, the Company was in the turnaround strategy and focused on “competitiveness & expansion”.

In this context, all initiatives in 2009 were directed toward “profitable growth” through rapid business growth, strong profit, modernizing aircraft to improve efficiency in fuel consumption and maintenance expenses, continuing the Business Transformation Process with the objective to be a “High Performance Organization”.

In order to establish a strong foundation for business development and preparation of the initial public offering (IPO), the Company continued its debt restructuring process, which had been started in 2005. Although the creditors were also facing the global crisis, the Company finally managed to close the restructuring deal. Some significant deals were the debt restructuring with ECA, which reached principle agreement without a guarantee from the Government of Indonesia, early repayment

52

Garuda Indonesia Laporan Tahunan 2009

Laporan Direksi Report from the Board of Directors

In the past they have not borne fruit and Garuda has been bypassed by nearby rivals... this time things will be different and that Garuda soon may reprise the glory days of the Swinging Sixties.
(Geoffrey Thomas, Air Transport World, October 2009)

of the debt principal, settlement of convertible bonds with Bank Mandiri, and buyback of the Floating Rate Notes (FRN) from the market. With respect to this accomplishment, the Company was awarded “Best Debt Restructuring Deal of The Year 2009 in South East Asia” from the Hong Kong based publisher Alpha South Asia.

Another milestone was the statement from the Air Safety Committee European Unit in July 2009 that removed Garuda Indonesia from the European Union’s list of banned airlines. This enabled the Company to continue the plan to develop flight networking, in particular longdistance international routes.

Meanwhile, the head office relocation to Garuda City Building, located next to Soekarno-Hatta International Airport, Cengkareng, was expected to promote higher efficiency and effective operations considering that all operational activities were integrated in one area.

Achievement in 2009 After successfully posting positive results in 2007 and 2008, Garuda Indonesia was able to repeat its success in 2009 amidst an unfavorable environment due to the global crisis.

The achievement was a result of success in implementing the corporate strategy and some initiatives in 2009, which brought a 4.5% increase in net profit to Rp 1.02 trillion after posting an operating profit of

Rp 918.29 billion. From an operational standpoint, we realized a potential in optimizing the Company’s performance. Growing the number of aircraft quickly without an adequate increase in demand led to deteriorating SLF (Seat Load Factor) from 76.5% in 2008 to 73.5% in 2009. The Company however had to modernize the existing fleets and add new aircraft to be able to capture momentum of the economic recovery in the years to come.

Meanwhile On Time Performance was recorded at 82.5% in 2009 compared with 83.9% in 2008 mostly due to increasing delays related to technical and airport facility factors.

Nonetheless, we are confident in making further progress in the future considering the improvement in the global economy. In addition, delivery of new aircraft will also enhance efficiency, as those aircraft are more fuel efficient. This will contribute to a significant decrease in operating expenses and support the energy conservation program that had been consistently applied in the last couple of years.

Implementation of several programs in the commercial business, including improvement in services, has enabled Garuda Indonesia to enjoy a 3% increase in the number of passengers from 10.0 million in 2008 to 10.3 million in 2009. Available Seat Kilometer (ASK) also improved by 4% from 20.1 million in 2008 to 20.9 million in 2009.

Enhancing Competitiveness Garuda Indonesia has modernized the existing fleet and already placed orders for 50 new Boeing 737-800NG and 10 Boeing 777-300ER, some of which have been gradually delivered since July 2009. During 2009, some new aircraft were directly delivered from the factory, including four Airbus A330-200 from Toulouse-France and five Boeing 737-800NG from Seattle-US. The refurbishment and modernizing fleets as well as 19 additional new aircrafts consisting of 15 units of Boeing 737-800NG and 4 units of Airbus 330-200 were intended to meet the increasing demand and supporting the Company’s expansion strategy.

In line with the Company’s business plan and strategy, Garuda Indonesia opened 7 new domestic routes and 7 new international routes. Following the refurbishment program carried out during 2009, we also introduced a brand new “Garuda Indonesia Experience” concept, a service based on the unique and distinctive Indonesian hospitality.

“Garuda Indonesia Experience” will provide a special brand identity for the Company while also promoting Indonesia in the international community. This concept was developed based on the 5 senses (sight, sound, smell, taste, and touch) and covering 24 “customer touch points” from pre-journey services to pre-flight, in-flight, post flight and post journey services.

Preparation for “High Performance Organization” In order to ensure continued growth and to achieve long term objectives, Garuda Indonesia has to transform into high performance organization. This has to be supported by all staff and employees with the strong characteristics of “competent & helpful, high performance & care, pro-active, innovative & extra mile” within “FLY-HI” corporate value.

In 2009, the Company developed 25 Key Performance Indicators (KPI) divided into operational, financial, and dynamic effect aspects. These KPI were incorporated in a “Management Contract” signed by the Shareholders’ representatives, the Board of Commissioners and the Board of Directors, which then circulated from the strategic level down to the execution level, involving a thorough monitoring program.

Company management processes focus on “Wildly Important Goals (WIGs) directed toward 3 main objectives, which are profitability improvement, service quality enhancement, and the achievement of on time performance. Through the WIGs implementation, we expect to gradually build on a “culture of execution” within Garuda Indonesia.

Human resource management has also been improved through development of a “Human Capital Management System” concept. This concept has also intensified the internalization of the“FLY-HI” corporate culture to all staff and employees. In addition, the implementation of a “reward and punishment” system has increased motivation and productivity of all staff and employees throughout 2009.

Good Corporate Governance In line with the Company’s strong commitment to implement Good Corporate Governance (GCG), GCG has been improved from time to time and in 2009 recorded a score of 80.79 out of the maximum 100. It means the Company is classified into the “Good” category based on 5 aspects being assessed such as rights and obligation of the shareholders, GCG policy, GCG implementation, disclosure of information, and commitment.

Several actions have been taken to follow up the assessment results such as establishing a nomination and remuneration committee, reviewing and refining the Code of Corporate Governance, imposing a whistle-blowing system, and uploading the Corporate Governance implementation report in our website to be widely accessed by the public. Worth of note is that no change in the composition of the Board of Directors took place in 2009. Outlook in 2010 In facing 2010, when a growth and transformation program will be carried out, Garuda Indonesia plans for an initial public offering (IPO) as part of our commitment to improve transparency and strengthen our capital structure to support sustainable growth for the Company.

In relation to achieving sustainable growth, we will further extend new flight service networking though the opening of several new routes and reopening of previous routes, both domestic and international routes.

As the first step to expand long-distance international routes, Garuda Indonesia will reopen services from Jakarta to Amsterdam via Dubai in June 2010. We will also open services to other destinations in Europe such as Frankfurt, London, Paris and Rome.

As a closing remark, we would like to extend gratitude to the shareholders who always provided support during challenging times, to all staff and employees of Garuda Indonesia for giving the best to the Company to achieve significant improvement over the last couple of years, to the business partners and other stakeholders for the beneficial partnerships and support, and finally to our valuable customers for loyalty in flying with Garuda Indonesia.

We strongly believe, with support from all stakeholders, Garuda Indonesia will be able to make further significant progress and become the nation’s pride in the international airlines industry.

Global Condition The global crisis still affected the airline industry throughout the year 2009. In line with the negative growth in the global economy, IATA (International Air Transport Association) reported a decline in traffic and yield of the global airline industry. Demand for passengers fell by 2.9% while demand for cargo dropped by 11%. Passenger yield and cargo each fell by 14%. This brought a decline in revenue for the global airline industry of almost 15% and total losses by nearly US$9.4 billion. As a result, around 26 companies declared bankruptcy and closed down operations in 2009.

Meanwhile, even though economic growth in the Asia Pacific region (excluding Japan) and Middle East region was quite satisfactorily, the growth of passengers was still negative. The association of Asia Pacific Airlines (AAPA) reported that the growth of International passengers for members of AAPA Intra Asia Pacific traffic fell by 14% in 2009, while Inter-Regional fell by 11%. Furthermore, cargo volume also showed a sharp decline, larger even than the decline in the number of passenger.

Despite the global crisis, the airline industry nevertheless benefited from the decline in the average fuel prices of 40%, reducingoperating expenses for the airline industry during the year.

General Domestic Condition Passenger Market Amid the unfavorable global economic condition, the domestic economy was, however, promising. The market within the airline industry in Indonesia still expanded, supported by improvement in macro economic indicators like inflation, exchange rate and interest rate. The number of outbound passengers carried by all commercial flights from Indonesian airports grew by 11.7% in 2009, thanks to an increase in capacity, lower ticket fare and a number

of new routes opened to commercial flights. In addition, the implementation of free fiscal surcharge for NPWP holders also supported higher traffic for passengers during 2009. Meanwhile, the number of inbound passengers through international airports also expanded by 12.4%.

Such a conducive environment was responded to by many domestic operators wit fleet expansion. Furthermore, foreign airlines also actively penetrated the Indonesian market to compensate for the decline in global international passenger numbers. This led to a tightening competition, which in turn affected yield.

Around 79.0% of outbound passengers went through 2 main airports: Soekarno-Hatta and Ngurah Rai.

Numbers of inbound passengers through Soekarno-Hatta airport increased by 8.4%, while number of inbound passenger through Ngurah Rai airport grew even higher at 18.3%, showing that passengers visiting Indonesia were hardly affected by the global crisis.

The number of domestic passengers carried by all domestic flights expanded by 11.7% from 31.9 million in 2008 to 35.7 million in 2009. This was supported by an increase in capacity, lower ticket fare (particularly enabled by escalating number of low cost carriers) and new route opened by many commercial flights. Around 49.6% of domestic passengers went through 2 large airports: Soekarno-Hatta Cengkareng and Juanda Surabaya. The number of passengers through Soekarno-Hatta airport amounted to 13.4 million, accounting for 37.6% of total domestic passengers, an increase of 12.6% compared to that in 2008. The number of passengers through Juanda airport reached 4.3 million, representing 12.1% of total domestic passengers, increasing by 21.7% compared to that in 2008.

Cargo Market International Cargo International air cargo traffic in Indonesia posted a decline due to lower export and import of commodities, which require larger spaces for cargo. Outbound cargo fell by 5.4% from 176.8 thousand tonnes to 167.3 thousand tonnes in 2009. Inbound cargo from overseas declined by 16.2% to 136.2 thousand tonnes.

Domestic Cargo Domestic air cargo posted a decline of 3.2% from 238.2 thousand tonnes in 2008 to 230.5 thousand tonnes in 2009. This indicates that the domestic economy has yet fully recovered from the global crisis.

Network Management Amidst an unfavorable global condition, Garuda Indonesia actively expanded its routes to reach optimum profit. This task was accomplished by Network Management, by which the Company mapped out its existing network and reassessed the performance of current routes. Based on the assessment, several routes were closed and plans redirected to more profitable routes.

In 2009, the company opened 14 new routes comprising 7 domestic and 7 international routes, while rerouting to 3 international routes. The new domestic routes were Denpasar-Mataram vv, Jakarta-Denpasar-Kupang vv, Jakarta-Jambi vv, Jakarta-Makasar-Kendari vv, JakartaMalang vv, Jakarta-Pangkal Pinang vv, Jakarta-Tanjung Karang vv, whereas the new international routes were Denpasar-Hong Kong vv, Jakarta-Melbourne vv, Jakarta-Seoul vv, Jakarta-Shanghai vv, Jakarta-Sydney vv, Mataram-Jakarta-Kuala Lumpur vv, and Surabaya-Hong Kong vv. However, from the 9 new international routes, 3 routes were discontinued in December 2009. At the end of 2009, the Company served 46 cities and 57 routes of which 34 were domestic and 23 were international routes. The Company aimed to have flights to all provincial capital cities in order to increase future aircraft utilization rate.

Aside from opening new routes, Garuda Indonesia also performed intensification of its existing network. The Company’s flight network currently connects 28 domestic cities and 24 international cities, of these nine are served by codeshare partners. In 2009, the codeshare partners were the 10 commercial airlines: Singapore Airlines, Silk Air, China Airlines, China Southern Airlines, Korean Air, Malaysian Airlines, Philippine Airlines, Vietnam Airlines, KLM and Qatar Airways, all of which serve the Southeast Asian and international market.

Intensification of flight routes was also carried out through an expansion in flight frequency, both for domestic and international routes. Domestic flight frequency in 2009 reached 69,644 times, or equivalent to 80.84% of total mainbrand flight frequency, relatively stable compared to a year before. Such allocation of flights was aimed to ensure that the number of Garuda Indonesia flights in the domestic market sustain the major frequency share and remain highly competitive. Such domestic flight frequency is available in 34 of the routes. Meanwhile, international flight frequency was recorded at 19.16%, in line with the relatively limited number of international routes and the limited number of wide-body aircraft required to serve long-haul routes to Japan, Korea, and China as well as the Middle East. In late 2009, Garuda Indonesia had 13 wide-body aircraft (Airbus 330-300, Airbus 330-200, and Boeing 747-400) or 19.4% of the total 67 mainbrand aircraft, serving 23 international routes.

Revenue Management In 2009, the Company performed various initiatives in order to generate optimum revenue from existing capacity. By understanding the competitive situation and market characteristics, Garuda Indonesia implemented the right pricing strategy to ensure achievement of optimum performance. In addition to monitoring competition and demand level fuel price fluctuation was also considered in determining the right passenger yield for each segment.

During 2009, the Company continuously increased capability in its revenue management system, used to assist the Company in managing existing capacity by understanding the characteristics of each passenger category and market condition so that optimum yields and Seat Load Factor (SLF) can be achieved. In turn, optimum yield and SLF help to establish optimum revenue. Domestic and international price determination was set according to strategic considerations, profitability, competition and demand as well as volatility in fuel price. Passenger yield – average passenger ticket fare per domestic kilometre was reduced by 14.05% from USCent 10.46 in 2008 to USCent 8.99 in 2009. Meanwhile as the international market experienced a drop in demand and tighter competition, passenger yield was reduced by 25.03% from USCent 8.79 in 2008 to USCent 6.59 in 2009. The combined yield of USCent 7.66 was a drop of 19.44% from USCent 9.51 in 2008. The decline in system-wide of yield was roughly in line with market prices that also declined overall due to lower fuel expenses for commercial flights, on the back of declining aircraft fuel prices.

Marketing From a marketing point of view, the Company actively conducted market penetration activities in large companies as well as banks in order to attract loyal customers. As of December 31, 2009, the Company already established cooperation with 591 corporations. Besides this, the Company also continuously strengthened its distribution network by developing various access points, such as launching the Internet Booking Engine (IBE) on January 16, 2009. IBE focuses on domestic flight route customers and has given convenience to customers in making reservations and purchasing tickets through the internet. At present the Company is in the middle of preparing online booking for international routes, hence, providing much more convenience to its customers. Close monitoring of online performance as well as internet bookings enabled the Company to monitor its capacity, so as to reach optimum revenue levels.

Commercial Performance in 2009 Total Passengers The Company posted an increase in total passengers transported in regular flight from 10.0 million passengers in 2008 to 10.3 million passengers in 2009, as available seat capacity (ASK) was increased by 3.97% during the year.

Revenue Passenger Kilometer (RPK) Along with increasing confidence from the customers, higher growth in demand and increasing production capacity, mainbrand flight RPK was relatively stable at 15.4 billion in 2009. International flight RPK recorded a decline of 2.7% to 8.5 billion, while domestic flight RPK experienced an increase of 3.2% to 6.8 billion.

Seat Load Factor Seat Load Factor (SLF) for mainbrand flights was recorded at 73.5% in 2009, a decline compared with 76.5% in 2008 as a result of higher competition and passenger yield and increased Available Seat Kilometer capacity.

Market Share International The number of international routes passengers from and to Cengkareng and Ngurah Rai-Denpasar airports showed some 7.2% increase in 2009, compared with the year before. Even though global economic crisis caused a decline in demand for Japan-Korea-China service, other services still showed healthy growth with the highest growth coming from Southwest Pacific service due to increasing number of commercial flights serving these routes, especially low cost carriers like Jetstar, Indonesia Air Asia and Virgin Blue.

As the outcome of low cost carrier aggressiveness, market share of Garuda Indonesia in the international market fell from 26.3% in 2008 to 23.2% in 2009. Nevertheless, Garuda Indonesia remained as the market leader for Japan-Korea-China area, Middle East and South West Pacific (Australia).

Domestic The number of passengers in the domestic routes from and to Cengkareng and Ngurah Rai airports in 2009 expanded by 14.0% compared with 2008. The global economic crisis had minimal impact on the Indonesian economy since the development of a regional economy created inter-region passenger flow that significantly

pushed business growth in domestic flights. Moreover, the use of bigger capacity aircraft also had a role in pushing the growth in total passengers as such large capacity allowed for more attractive ticket fare offers.

Stiffer competition caused the increase of total passengers using Garuda Indonesia to be lower than the growth of domestic market. Competitors aggressively increased their flight frequency for some domestic routes hence making the Company’s frequency share fall from 32.8% in 2008 to 32.1% in 2009. Such increases in turn increased total passengers of the competitors, thus reducing the Company’s market share from 29.5% to 27.4% in 2009. Garuda Indonesia was in the second position in terms of domestic market share.

Cargo Freight tonnage carried by Mainbrand flight fell by 1.6% from 146 thousand tonnes in 2008 to 144 thousand tonnes in 2009 due to weakening demand for international cargo. Meanwhile, freight tonnage Carried in domestic, Middle East and Southwest Pacific services posted a positive growth, supported by capacity expansion, in contrast to other international services which posted a negative growth.

Cargo load factor carried by Mainbrand flight fell by 6.74pp from 44.19% in 2008 to 37.45% in 2009 due to intensifying competition and weakening demand for international cargo. The capacity expansion at the Middle East and Southwest Pacific services successfully improved the Company’s competitiveness, which was reflected in the increase in cargo load factor by 2.62pp and 2.51pp, respectively.

Outlook In order to support the accomplishment of Quantum Leap 2014, Garuda Indonesia will continue conducting commercial programs to reach targeted revenue. Marketing programs aimed to attract new customers and maintain loyal customers, to expand route and networks, to reposition the product/brand, to develop corporate sales and to enhance network traffic are expected to increase SLF and Passenger Yield to reach the targeted revenue. Efforts to increase direct selling contribution will continuously be carried out through the implementation and development of e-Commerce, including the launching of on-line booking and ticketing for international routes in 2010.

Meanwhile, improvement in aircraft utilization and reduction in ground time are expected to consistently support the accomplishment of targeted revenue. In the future, Garuda Indonesia is aiming to become a member of Global Alliance. With the inclusion of Garuda Indonesia into Global Alliance, it is expected that improvement in the service level, flight network and number of passengers can be realized.

Intensifying competition in the airline industry, which not only came from foreign airlines but also domestic airlines have affected the Company’s operating performance during 2009. This competition is heightened by the aggressiveness of most low cost carriers.

Route and Network Aligned with the turnaround strategy implemented by the Company during 2009, where the Company stressed improving its competitiveness in both domestic and regional areas, Garuda Indonesia actively carried out expansion through its route and network development. In 2009, the Company closed down several routes which were deemed to be unprofitable and opened up some new routes that are expected to contribute profit. Aside from that, Garuda Indonesia also increased its flight frequency in some specific routes. This expansion in routes and additional flight frequency has increased the Available Seat Kilometer (ASK).

Aircraft Utilization Unlike ASK and FATK which experienced some growth after the increase in the number of aircraft, aircraft utilization posted a decline. Utilization levels of aircraft in 2009 recorded an average of 9:00 hours per day, declining from 9:50 hours per day as a result of crew shortage due to the arrival of several new aircraft such as the Airbus 330-200 and Boeing 737-800NG as well as weakening demand in some domestic routes. In addition, this decline was caused by some aircraft that underwent maintenance (Boeing 747-400). Meanwhile, decline in the aircraft utilization of Boeing 737-400 was caused by preparation to sell the aircraft. Utilization of Boeing 737-500 aircraft experienced a drop as there was crew shortage and its allocation as a standby aircraft for chartered flights. As for the Boeing 737-800NG aircraft, the utilization level also declined due to additional number of planes.

In the future, to increase the aircraft utilization level, Garuda Indonesia will continue to develop its route and network to all provinces in Indonesia in addition to recruiting new crew.

Citilink In line with the development of the low cost carrier market segment, Garuda Indonesia also implemented a policy to employ more of its SBU Citilink. After receiving principal agreement from the Ministry of State-Owned Enterprise and Legal Entity ratification from Law and Human Rights Minister of Republic of Indonesia, PT Citilink (Persero) is currently in process of obtaining the Commercial Flight Business Certificate (SIUPP) and Air Operator Certificate (AOC) from the Department of Transportation to legally run a commercial flight business independently as a true Low Cost Carrier (LCC).

Presently, Citilink are still using Garuda’s SIUPP and AOC by operating 3 aircraft namely two B737-300 with 148 seat capacities and one B737-400 with a 170 seat capacity. By the end of 2009, Citilink has already covered 7 cities in Indonesia namely, Ampenan, Banjarmasin, Balikpapan, Batam, Cengkareng, Kupang, and Makassar, through flights based out of Surabaya. The Surabaya-Makassar route was a new route opened in 2009.

As an outcome of the development in routes and fleet performed in 2009, the performance of Citilink showed a significant improvement compared with a year before. The total number of passengers served in 2009 reached 588,813 up by 277.46% from only 155,992 passengers in 2008. Citilink’s ASK flight was 807 million or approximately 8.5% of total domestic ASK flight of mainbrand and Citilink. Further, FATK also improved to 33 million from 9 million during the same period. Citilink’s Seat Load Factor (SLF) improved to 63.2% in 2009 compared with 62.1% a year before. Passenger yield experienced a drop from USCent 4.7 in 2008 from USCent 4.3 in 2009 due to tougher competition in the low cost carrier segment.

Hajj Flight Program In accordance with the business program for 2009, which was a continuance from the previous program, hajj flights were also one of the programs whose performance was targeted to improve through higher revenue and through effective cost management. In 2009, Garuda Indonesia successfully booked better performance as reflected in the improvement of the profit margin. In facilitating hajj flight for the year 2009, the Company operated 15 wide-body aircraft that consists of 13 specially rented aircraft and 2 regular Airbus 330-300 aircraft. Garuda Indonesia operated the aircraft according to specifications endorsed by the Ministry of Religion Affairs Department which were 8 Boeing 747 aircraft with 455 seating capacity, 1 Boeing 767 with a 325 seating capacity, 6 Airbus 330 with a seating capacities of 325, 360, and 380. To well serve all the pilgrims, 91% of hajj cabin crews recruited for the hajj operational program 1430 H were specially recruited men and women from various provinces.

Apart from that, to continue to improve hajj flight service, Garuda Indonesia had already performed many initiatives to improve its services like implementing QMS ISO 9001-2000 certification that consists of doing an audit surveillance and customer satisfaction survey. The hajj period of 2008-2009 was the seventh year for the Hajj Unit in implementing international quality standards, certified by certification body SGS International. The ISO 9001-2000 certification for hajj service, other than to serve the requirement for consumer protection law, also served to guarantee that the hajj service by Garuda

Indonesia had already reached international level in terms of service and safety assurance .

Garuda Indonesia, through hajj flight program in 2009 served 264 thousand of passengers, an increase of 1.71% compared to the period in 2008. This amount consisted of 37 thousand passengers from the period of home departure (phase II) 1429 H in January 2009 and 227 thousand passengers in 1430 H during OctoberDecember 2009, which were divided into 300 flight groups (kloter). Embarkation stations, the same as the year before, were Balikpapan, Banjarmasin, Banda Aceh, Jakarta, Makassar, Medan, Padang, Palembang, Solo and Surabaya. In the mean time, on time performance (OTP) for hajj flight reached 73%, of which 96% were recorded in the first phase and 46% in second phase. Delays in the second phase were caused by airport congestion, security checks, aircraft rotation, and technical factors. Operational Performance Adding more aircraft in 2009 resulted in improvement in the operational performance indicators like Available Tonne Kilometres (ATK), Available Seat Kilometers (ASK), and Freight Available Tonne Kilometres (FATK). Mainbrand flight ATK experienced an increase of 7.16% from 2.5 billion in 2008 to 2.7 billion in 2009. ASK also showed an improvement of 3.97%, whereas FATK grew by 17.25%.

On Time Performance An operational performance indicator which is important for the airline industry is On Time Performance (OTP). In 2009, Garuda Indonesia’s OTP was 82.45%, a decline from 83.85% in 2008. The cause for delays was driven by uncontrollable factors (8.75%) and controllable factors (8.24%). From uncontrollable factors, the major cause of delay is airport facilities at about 6.74%, whereas technical factors and flight operations were internal factors which caused delays at respectively 2.95% and 2.52%. From the available data, delays due to flight operations factor were partly attributed to limited cockpit and cabin crews for B737 classic aircraft. Improvement in OTP was conducted through monitoring of operational enhancement and control together with station management control. In addition, Garuda Indonesia also conducted an OTP enhancement program and monitoring towards the 3 main factors of delay which were airport facilities, technical, and flight operations.

Flight Safety Aspect Flight safety aspect was another essential factor in the airline industry. After obtaining IOSA Certification in 2008, an internally accredited certification for flight safety and protection, Garuda Indonesia consistently implemented its Safety Management System as one of the initiatives to improve safety performance. Initiatives performed during 2009 were the holding of a regular corporate safety committee meeting, and updating safety policy, quality policy, security policy, and environment policy.

A flight safety indicator that shows the level of flight safety attained by a commercial flight is the incident rate. The implementation of the Safety Management System by the Company was part of the effort to reduce the incident rate. The incident rate recorded a slight increase in 2009 in line with the expansion of fleet during the year.

Outlook Going into 2010, Garuda Indonesia will continue the initiatives carried out in 2009. Special attention will be given to improve On Time Performance (OTP), including efforts to adjust flight schedule according to the condition in the field. In addition, the Company will also focus on spare part availability and outstation as well as on strengthening the aircraft maintenance qualification (to A check) in Denpasar.

Another important thing to highlight for 2010 is related to cabin crew recruitment which is targeted to reduce discrepancy between the number of planes and cabin crew, possibly affecting operational performance. Moreover, coordination between ground handling, airport authority and the availability of backups for existing systems and procedures will also be improved and enhanced in order to have a continuous improvement in operational performance in the future.

The nature of being engaged in a service industry has underscored Garuda Indonesia’s recognition of the importance of providing high quality services to its customers. This is in line with the Company’s corporate value: customer centricity. Garuda Indonesia always puts customers as its main focus of attention. Therefore, the Company thoroughly designs its service to ensure that all aspects have been taken into consideration. The Company identifies possible types of interactions between its staff and customers, starting from prejourney through pre-flight, inflight, post flight until post journey and then designs appropriate services to satisfy customer needs. After all planning aspects are completed, monitoring on quality will be carried out to ensure satisfactory assessments from customers.

The Company has actively launched various programs to improve quality of services, starting from developing a vision that focuses on the customers; encouraging innovation to create high value added products, building a service excellence culture and streamlining business processes to accelerate the delivery of services.

In 2009, Garuda Indonesia launched a new service concept, Garuda Indonesia Experience, a service concept based on Indonesian hospitality. This was in line with the Company’s vision to become a well distinguished airline through providing quality services to serve people and transport around the world with Indonesian hospitality. Garuda Indonesia has a special mission as the flag carrier of Indonesia. This Indonesian hospitality concept has been translated into services that delight the five senses, which are reflected in the use of material and ornaments uniquely Indonesian for the design interior aircraft, the smell of an exotic traditional scent, the sound of Indonesian indigenous folk music and the taste of Indonesian traditional food and beverages. During 2009, the Company carried out a refurbishment program on its existing of fleet: Boeing 747-400 and Airbus 330-300 by changing design interiors and adding Audio Video on Demand (AVOD) facilities, in line with Garuda Indonesia Experience.

Above and beyond involving the five senses, Garuda Indonesia Experience is about basic values: on time performance and safety (for product), prompt and precise (for process), clean and comfortable (for premises) and reliable, professional, competent and helpful (for staff ). These have been widely accepted by the customers, and have successfully improved the image of Garuda Indonesia in the mind of customers. Besides launching the Garuda Indonesia Experience, the Company also launched a bar coded boarding pass and check-in kiosk at Soekarno-Hatta Airport in 2009. In addition, improvement in call center services was also carried out which allowed the Company to earn the Call Center Award from Carre – Center for Customer Satisfaction & Loyalty and Marketing magazine. Garuda Indonesia also obtained appreciation from Frontier Consulting and Business Week magazine as Indonesia’s Most Admire Company (IMAC) 2009: The Best in Building and Managing Corporate Image.

To ensure that the execution of our service strategy was in accordance with plan, Sa ervice Delivery Unit was established as the unit responsible for the delivery of consistently excellent services, which include Ground Service, In Flight Service and Post Journey Service.

Customer Satisfaction Index Because customer satisfaction is the objective of numerous initiatives to improve services, the Company, therefore, regularly measures customer satisfaction through an onboard survey, presented in the Inflight Magazine. Based on the results, and in line with improvement in services, the customer satisfaction index reached 80.74 in 2009, an increase from 78.56 in 2008. Such a customer satisfaction index rating is higher than the KPI of 80.

Feedback Performance The strong commitment toward services pushed the Company to implement a system that allows feedback from customers. The Company provides various communication channels to enable customer assessment on service quality. This assessment is called Customer Voice, which can be submitted through E-mail, Call Centre, Suggestion Form or letter.

During 2009, customers’ awareness to give feedback on Garuda Indonesia’s service quality has persistently increased. The number of feedback submitted by customers grew by 2.5 times in 2009 compared with that in 2008. Meanwhile, initiatives to improve quality of services which had been carried out throughout the year 2009 brought positive results as was shown by higher percentage of compliment from the customers to 45% in 2009 from 30% in 2008. On the other hand, the percentage of complaint fell to 35% in 2009 from 52% in 2008.

Appreciation from the customer has continuously been received by the Company particularly since the operation of new fleet with the Garuda Indonesia Experience concept as reflected on aspects of Cabin Appearance, Seating Comfort, Lavatory and Inflight Entertainment. Garuda Indonesia targets a response rate of 90% of the total Customer Voice received every month. Such Customer Voice will be responded between 2-14 working days, with the exception of cases that involve Legal Institutions as this category normally requires a longer time to settle.

Management Report & Improvement Program A. Management Report Each Customer Voice message received by the Company is documented in the Customer Voice Database to be processed and addressed to management and related decision making unit. The available Management Reports are as follows: 1. Quarterly Customer Voice Report addressed to the Director and related Service Provider 2. Monthly Management Report addressed to the Director and related Service Provider 3. Weekly Management Report – BOD

B. Improvement Program All settlements of customer complaints are responsive actions that serve as a service recovery against any failure/flaws in products/services. Of the same importance, Garuda Indonesia also takes Preventive Actions that mitigate against repeat complaints by customers.

In line with the Company’s efforts to continue service reorganization, improvement and development to consistently fulfill customers’ expectations, every input related to “Customer Needs and Wants” will be processed and the information categorized by related units so that each function can benchmark the data to decide corrective actions or improvement programs. Customer input has become the reference for the following ongoing and future improvement programs, which include: - Improvement in OTP and baggage handling - Recommendation on reading materials in the aircraft - Improvement in Inflight Entertainment - Change in the cabin crew uniform Garuda Frequent Flyer Other initiatives conducted during 2009 were related to the appreciation given to loyal customers joining the Garuda Frequent Flyer (GFF) program. Various attractive offers were provided to GFF members; categorized into: Blue, Silver, Gold and Platinum. Through several policies related to the Frequent Flyer Program such as various Progressive Acquisition program initiatives, Garuda Indonesia successfully acquired 84,156 new GFF members during 2009 with an average increase per

Several initiatives to improve services were also performed at GFF Program and Services by adding GFF IT System and Database features, a GFF Website and GFF Communication as well as a GFF Service standard.

Cabin Crew The Company is aware of the importance of frontliners, particularly cabin crew as the Company’s representatives in offering excellent services to customers. Therefore, the Company has seriously developed its staff, enhanced their skills as well as offered adequate remuneration so that their motivation in providing high quality services can be maintained. The Company continuously improved its Standard Operating Procedures especially dedicated to services while imposing sanctions on cabin crew who violated prevailing rule.s

Customer feedback on the cabin crew’s quality of services is also measured through a survey which is conducted every year. All these initiatives allowed Garuda Indonesia to obtain a four star certification from Skytrax, together with another 27 global airlines. Even though this certification was given at the beginning of 2010, this appreciation was a reflection of the hard work of all employees carried out during 2009. Outlook Going forward, Garuda Indonesia will continuously improve its service quality based on FLY HI values (Efficient & Effective, Loyalty, Customer Centricity, Honesty & Openness and Integrity). Supported by excellent services, Garuda Indonesia is ready to meet accelerated growth in the forthcoming years.

Garuda Indonesia has a Strategic Business Unit (SBU), an independent business unit within the Company, focussing on optimizing resources to maximize the Company’s value. This unit offers production and services to both internal and external customers. Garuda Indonesia has 3 SBU responsible to directors, namely Garuda Sentra Medika (GSM), Garuda Cargo and Citilink (Low Cost Carrier).

SBU Garuda Sentra Medika SBU Garuda Sentra Medika (GSM) has a vision to become the leading healthcare provider for airlines and State Owned Enterprises in Indonesia. At the beginning, GSM was intended to support Garuda Indonesia’s businesses by becoming the leader in Aviation Medical Services

and developing healthcare services related to the airline businesses. In the future, GSM is expected to develop into a reliable and high quality healthcare business, thus be independent and able to compete in the industry.

GSM conducted various programs during 2009 as follows: 1. To become the best in all operational aspects 2. To develop hospitals through strategic partner 3. To develop new satellite clinics in Denpasar and Bekasi 4. To establish PT ex SBU Garuda Sentra Medica.

In 2009, GSM’s operating revenue reached Rp 44.4 billion compared with Rp 43.9 billion in 2008. Revenue from corporate customers reached Rp 43.8 billion in 2009 compared with Rp 43.3 billion in 2008, while revenue from third party customers recorded at Rp 616.5 million in 2009 compared with Rp 612.8 million in 2008. Revenue from Medical Health Plan Member was Rp 36.4 billion in 2009, the highest contributor to total revenue.

SBU Cargo SBU Cargo is an air cargo service provider. Since SBU Cargo is yet to operate its own freighter, it only sells unutilized cargo capacity owned by regular flights.

SBU Cargo posted a decline in operating income from Rp 971.6 billion in 2008 to Rp861.0 billion in 2009 as a result of the global crisis, which affected export-import activities in Indonesia. SBU Citilink SBU Citilink is a low cost carrier targeting low-budget travellers in the domestic market. Up to December 31, 2009, Citilink operated 2 Boeing 737-300 and 1 Boeing 737-400, supported by 38 cockpit and 50 cabin crew. Citilink serves 7 routes with Surabaya as its base and is connected with cities including Ampenan, Banjarmasin, Balikpapan, Batam, Jakarta, Kupang and Makassar.

Taking into account cargo carried by Citilink, the total freight tonne carried by scheduled flights reached 13,043 tonnes, an increase of 345.38% compared with the previous year. During 2009, Citilink programs were as follows: - The establishment of Citilink Indonesia. - The improvement in On Time Performance. During 2009, OTP reached 77%. - The consolidation of new routes and an increase in frequency. - The optimization of Citilink routes. - The refreshment of Citilink Brand in line with a Low Cost Carrier culture. - Web Check In. - The development of Internet Banking Payment.

During 2009, Citilink carried 588,813 passengers, an increase of 277.5% compared to the previous year (Citilink only operated for 3 months in 2008 due to restructuring carried out from the beginning of 2008 until September 2008) and 13,043 tonnes cargo, an increase of 345.4%. SLF recorded at 63.16% while CLF at 32.38%. Passenger Yield recorded at USCent 4.29, a decline from USCent 4.70 in 2008, while cargo yield was at USCent 15.31.

The management composition of PT Aerowisata is as follows: President Commissioner : Emirsyah Satar Commissioner : Abdulgani Commissioner : A. Anshari Ritonga President Director : Alexander M.T. Maneklaran Director of Finance and Business Development : Doddy Virgianto The operating revenue of PT Aerowisata was recorded at Rp 1,150.9 billion in 2009, an increase of 5.7%. With an increase of only 1.1% in sales expenses, gross profit increased substantially to Rp 296.5 billion in 2009, expanding by 21.7%. However, as the company incurred an increase in operating expenses, which was partly attributed to the increase in a hotel’s capacity, operating profit only grew by 13.6% to Rp 92 billion in 2009. Overall, net profit was Rp 76.7 billion in 2009.

Meanwhile, total assets were Rp 1,498.1 billion as of December 31, 2009, an increase of 22.8%. Liabilities increased by 60.8% to Rp 496 billion at the end of 2009, while equity grew by 10% to Rp 996,6 billion.

PT Abacus Distribution Systems Indonesia is a company engaged in technology information and communication services. The company’s vision is to become a leading provider of Global Distribution Systems (GDS) information technology and communication services in Indonesia. The company’s activities include providing a computerized reservation system, leasing computer equipment to travel bureaus, providing training facilities to employees of travel bureaus and providing technical support to travel bureaus that utilize the Computerized Reservation Systems (CRS).

The Board of Commissioners and Director of PT Abacus DSI is as follows: President Commissioner : Agus Priyanto Commissioner : Achirina Commissioner : Tan Kien Hui Managing Director : Widjaya Hadinukerto The Operating revenue of PT Abacus DSI was Rp 25.1 billion in 2009, increasing by 7.8% compared to that in 2008. Improvement in efficiency resulted in operating expenses increasing only a slight 3.7% to Rp 21.9 billion in 2009. However, as the company incurred other expenses, net profit posted a decline by 50.4% to Rp 1.4 billion.

PT Garuda Maintenance Facility Aero Asia was established on April 26, 2002 to carry out and support the government’s policy and program related to the economy and development in general, particularly in the area of repair and maintenance services for aircraft and other field related to these services, and to maintain profits for the Company by performing repair and maintenance services for aircraft engines, including its engines and components.

The composition of the Board of Commissioners and the Board of Directors of PT Garuda Maintenance Facility Aero Asia is as follows: President Commissioner : Emirsyah Satar Commissioner : Hadinoto Soedigno President Director & CEO : Richard Budihadianto Vice President Director : Agus Sudaryo General & Human Resources Director : Hanrozan Haznam Director of Finance : Gatot Satriawan The company’s operating revenue was relatively stable, growing by 3.4% to Rp 1.6 trillion, however higher direct expenses of Rp 1.3 trillion (an increase of 5.9%) led to a lower gross profit of Rp 324 billion (declining by 5.8%) in 2009. Meanwhile, in line with an efficiency program promoted within the organization, operating expenses fell by 6.7% to Rp 251 billion. The result was a decline in operating profit by 2.7% to Rp 73.2 billion. Further, as the company booked other expenses of Rp 7.2 billion, net profit declined by 29.4% to Rp 48 billion

Assets were Rp 1,435 billion as of December 31, 2009, increasing by 19.5% from 2008. Such an increase was supported by an increase in liabilities of 25.2% to Rp 980.5 billion and the increase in equity by 8.7% to Rp 454.5 billion.

PT Aero Systems Indonesia, formerly known as PT Lufthansa Systems Indonesia, was established in 2005. At the beginning, Garuda Indonesia owned a 51% stake in this company, while the remaining 49% was owned by Lufthansa System Group GmbH (LSG). On December 10, 2008 there was a transfer of ownership from LSG to PT Aerowisata. The activities of ASI include consultation services and information technology engineering systems as well as maintenance services to carriers as well as other industries.

The operating revenue of PT Aero Systems Indonesia fell by 5.2% to Rp 108.9 billion in 2009. Meanwhile, operating expenses grew by 1.1% to Rp 93.3 billion, leading to a decline in operating profit by 30.4% to Rp 15.6 billion. Coupled with other expenses of Rp 3.6 billion, net profit dropped from Rp 15.1 billion in 2008 to Rp 8.6 billion in 2009.

As of December 31, 2009, assets were Rp 192.0 billion, increasing by 8.5% compared with that in 2008. Such an increase in assets was supported by an increase in liabilities by 7.4% to Rp 94.8 billion and equity by 9.6% to Rp 97.2 billion.

Engaged in the service industry, Garuda Indonesia acknowledges the importance of human resources in creating a strong and sustainable corporate performance. Therefore, since 2005 the Company has actively redefined its policies and human resources systems in order to be aligned with the Company’s grand strategy and objectives. For Garuda Indonesia, people have always been the main priority. Employees can be viewed as human capital, implying that Garuda Indonesia’s employees have knowledge, skills and potential work habits that can support the Company’s productivity. In order to become valuable capital with a strong contribution to the organization, every employee has to have a healthy work spirit and hence will be competent enough for the organization.

Other challenges that need to be anticipated to become a high performing organization is preparing future leaders and competent people through the implementation of business management and strong employee management systems so that the Company’s strategy, corporate values, processes and employees can create a synergy to record sound performance.

In order to reach Quantum Leap 2014 and to create a sustainable growth, it is undeniably important for Garuda Indonesia to become a high performance organization through highly competent, helpful, high perform & care, pro-active, innovative & extra mile employees, based on FLY-HI corporate values.

The reengineering of human resources starts with mapping employees according to their competencies and interests. This mapping procedure has identified selected employees, who the Company believes able to provide optimum contribution towards the Company’s performance. Furthermore, selected employees are provided with a “Management Development Program” or “Professional Development Program” so they can continue to develop their skills and provide their best performance to the organization.

Human Capital Strategy starts from planning, development, system and procedure creation, career management and succession plan aligned with the Company’s business strategy to realize its vision

and mission. The training program for employees is based on the needs for individual development to support strong performance and career. In addition, development programs for future leader are prepared through management development programs. With an integrated reward and performance evaluation system, employees, as human capital, can deliver their potential and competence to bring support to the Company’s performance.

Changes in system and procedure carried out during the year were related to the new system and recruitment policy in line with the market, particularly in the middle of tightening competition in the airline industry today. A good recruitment system is believed to ensure the availability of competent and “willing to change” employees as well as high integrity employees as required in the company’s philosophy and values of FLY-HI (Efficient & Effective, Loyalty, Customer Centricity, Honesty & Openness and Integrity). These values are believed to be a guide for every Garuda Indonesia employees to act and work to achieve common goals.

Apart from recruitment, a succession factor is also an important factor to be considered in order to achieve a high performing organization. The Company believes that to be able to have adequate good quality leader in the future, it has to go through a series of preparations.

Management Development Program Any development program aimed to prepare the future leaders, is an investment directed to employees with high potential. Garuda Indonesia’s Management Development Program (MDP) is intended to align with the Company’s long term plan and as part of the Succession Plan.

During 2009, Garuda Indonesia held MDPs in several stages, namely the Leaders Forum which is designed for employees one level below Board of Directors and is held

on a monthly basis; Operations Leaders Development Program (OLDP) is targeted for employees two levels below Board of Directors and was carried out for 1 batch for a six month period; and Emerging Leaders Development Program (ELDP) is designed for employees three levels below Board of Directors and was held for 1 batch for a six month period.

Leaders Forum The Leaders Forum program is conducted in form of a FORUM, a seminar aimed at Vice Presidents (VP) and Senior Managers (Sr GM) to refresh and sharpen their leadership and strategic management skills in order to face challenges in the airline industry.

Through this forum, participants are expected to: a. Be able to develop strategic initiatives to support the Company’s visions and targets. b. Be able to direct changes which lead to positive impacts on the sustainability of the Company. The Leaders Forums conducted in 2009 were as follows: 1. Leaders Forum 1 on June 26, 2009 with the topic “Strategic & Transformational Leadership”, and speaker Mrs. Octa Melia Jalal, SH., MM., MA from PPM; 2. Leaders Forum 2 on July 31, 2009 with the topic “Managing Strategic Services”, and speaker Mr. Indra K. Jussi from SQC (Service Quality Center) Indonesia; 3. Leaders Forum 3 on August 28, 2009 with the topic “Strategic Financial Management”, and speaker Mr. Emirsyah Satar, President & CEO of PT Garuda Indonesia (Persero); 4. Leaders Forum 4 on October 16, 2009 with the topic “Managing Transformational Change”, and speaker Mr. TB Rahmat - Founder of Triputra Group; 5. Leaders Forum 5 on November 20, 2009 with the topic “High Performance Organization”, and speaker Mr. Chandra Purnama – CEO of Perum Pegadaian.

Operational Leaders Development Program (OLDP) The OLDP is aimed at providing Senior Managers/ General Manager with the knowledge and skills required to perform managerial tasks at units under their line of authority.

Through this program, participants are expected to: 1. Acknowledge their own talents and strengths and use them effectively to carry out daily tasks. 2. Able to carry out problem solving and decision making process in a systematic and rational manner. 3. Able to communicate effectively in the organization. 4. Able to analyze business processes and airline industry management, determining consequences. 5. Able to analyze the impact of their business unit’s operational activities on the Company’s financial performance and use budgeting as a tool for financial planning and control. 6. Able to improve the effectiveness of their business units to support quality services. 7. Able to manage changes effectively in their business unit. 8. Able to perform leadership functions to increase performance and develop the skills of subordinates.

Emerging Leaders Development Program (ELDP) Batch 1 of the ELDP Program was attended by Managers and Supervisors. The program is carried out in several stages as follows: 1. October 19, 2009: Pre Assessment and Coaching; 2. 20 - 30 October 2009: Classroom Training I; 3. November 2 - December 1, 2009: Project Proposal preparations; 4. 2 - 11 December 2009: Classroom Training II; 5. December 12, 2009 - April 11, 2010: Project Implementation.

In implementing the ELDP or OLDP programs, MDP participants together with their respective superiors are formulating assignments which will run during the program period. Learning activities undertaken to support the achievement of the target assignments include: • In-class training • Case studies • Individual assignments such as research and innovations • E-learning • Sharing sessions

Learning through the coaching process or periodic mentoring with their respective supervisors as Learning Facilitator and with external mentors about the implementation of assignments. Learning through participation in meetings. Presenting to management representatives, supervisors and an external mentor on the duties to be undertaken during the program and reporting the final results.

The results of these MDP programs were: • Improvement on existing systems that enhance efficiency and effectiveness; • Promote innovation, for instance, new systems that can support Company performance. Being a company that emphasizes safety and comfort delivered to the customers, the qualification of frontliners have to be ensured, checked and maintained. Therefore, they are required to join mandatory training to keep up their qualifications as well as to participate in development training.

Aircraft Crew Training To maintain the qualifications and competencies of the aircraft crew; the pilots and cabin crews are required to undergo periodic “recurrent training”.

Each pilot is required to undergo qualification check twice a year, which includes flying skills to maintain their proficiency level as well as medical testing. In addition, each pilot has to attend in-class training as a requirement to maintain competencies.

Meanwhile, cabin crews are required to take a qualification check once a year, consisting of qualification on flight safety regulations, services, and medical checkups.

During 2009, the Company conducted the Recurrent Training for all pilots and cabin crews. The training was divided into 223 pilot classes and 606 classes for cabin crews. Recurrent training for pilots increased by 28% in 2009, while for cabin crew it grew by 25% compared to that in 2008. Training for Frontliners To improve the quality of service to its customers, Garuda Indonesia provides service attitude training to all its frontliners. The objective of the training is to establish a professional image for frontliners which will shape Garuda Indonesia’s Company image. The training is in a form of service attitudes as well as dress and appearance code of conduct to reflect the FLY-HI culture.

During the year 2009 around 855 participants joined the training, which was conducted in 45 batches. Participants include frontliners from Garuda Indonesia as well as from third-parties who do “ground handling”.

In performing their tasks, Garuda Indonesia employees use FLY-HI values as their guide, which consists of competent & helpful, high performance & care, proactive, innovative & extra mile attitudes. Hence, under the Human Capital Management system they will be able to become quality leaders in the future as well as to create an “engaged” feeling among employees so that employees and ex employees can always deliver their best to the organization.

A Solid Team Composition Garuda Indonesia is determined to improve the recruitment system to ensure the availability of highly competitive employees. The Company also seeks to have the right composition of employees to achieve highperforming teams. As of December 2009 the Company had 4,668 permanent employees compared with 5,355 in 2008. A total of 533 personnel participated in the second career program.

Learning and Development Learning and development systems for employees conform with the needs of the organization and are directed toward Company strategy. This strategy is designed using a Balanced Scorecard approach, whereby learning has become part of integrated learning. The need for learning at the corporate level is then translated

into respective work units, and so forth, until it reaches individual level through comparing the needs of the Company with the talent of each individual. When there is a discrepancy, a signal for a learning need for each employee is given.

The improvement in competencies and competitiveness is not only the responsibility of line managers but also all individuals within organization. This process is conducted continuously and consistently through appropriate and structured training and development programs. Therefore, the existing learning management is expected to be able to build a learning culture through a high impact learning organization. Regularly, the Company conducts evaluation on standards of employee development and overall learning to ensure effectiveness, particularly in increasing conducive learning. A strong commitment from the management is manifested through the establishment of training facilities, including an electronic learning system “(learning content management system)” and Garuda Indonesia Training Center (GITC). During year 2009, the number of “e-learning” modules reached 40 discussions, which was accessed by 3,533 employees, higher than target. This development was also done using hardware support (servers) to accommodate the greater needs for “e-learning”.

Investment in Employees Garuda Indonesia is highly committed to continuously develop the ability of its employees. The Company foresees this commitment as an investment in order to maintain sustainable growth. The Company has also allocated a budget for employee development. In 2009, around Rp154.4 billion was spent for the development of Human Capital consisting of training and facility development expenses.

Fair and Equal Treatment for All Employees Garuda Indonesia has a high commitment to constantly provide fair and equal treatment for all employees. The Company provides equal opportunities for every employee to develop themselves and show their full potential to the organization. The Company also has a standard of achievement (Key Performance Indicators - KPIs) that are transparent so that each individual understands its duty in order to achieve organizational goals and be able to measure the awards they should receive when these KPIs are met. These ensure that all employees can work in a conducive environment and present their best performance to support the achievement of a high performance organization.

Outlook Garuda Indonesia will continue to conduct evaluation and monitoring of its Human Capital Management system to ensure the maintenance of high labor productivity. Several new initiatives will be launched in 2010 such as a “Whistle Blower” program in which every employee can provide input to others, including the Board of Directors and Commissioners, without concern that their identity will be known, as this program will be managed by third parties. This will also act as valuable input for future development of the organization. Meanwhile, the remuneration system will also continously develop on par with the market so that Garuda Indonesia can maintain its position as Employer of Choice for job seekers in Indonesia.

Another plan is the implementing of Total Rewards or appreciation given by the Company, either in form of measures or plans to attract, increase motivation and retain employees. This will support the implementation of a business strategy to increase business performance and create sustainable performance, while the contribution of each individual toward the Company’s success and growth will be accordingly evaluated and appreciated.

The development and implementation of the Information Technology (IT) program at Garuda Indonesia throughout 2009 was primarily aimed to support the business strategy in place. In accordance with the “turnaround” business strategy stated for 2009, various IT products and services were directed toward the implementation of this strategy.

In general, the Company’s IT development concentrated on three things: operational excellence, customer intimacy, and product innovation. In the field of operational excellence, in an effort to align the implementation of the IT system, the Company performed initiatives including strengthening the automation process and reducing dependency on manual activities as well as providing easy

documentation and process standardization by implementing some IT application as follows: • Updating passenger revenue reporting application: “Passenger Revenue Accounting System and Reporting”, which was integrated to conform with the regulation and procedure of the world’s airline organisation, The International Air Transport Association (IATA). • Developing human resource management application: “Employee & Manager Self Service System, Employee Performance System & Cockpit Crew Appraisal” to make management and supervision of staff performance easy to perform. • Developing function and module application Enterprise Resource Plan in order to fulfill the need for aircraft management as well as maintenance & engineering • Developing and implementing Online Fuel Garuda (FOGA) application at all branch offices to provide ease of management and control of aircraft fuel use for every flight. • IOCS Implementation (Integrated Operations Control Systems) on the operational aviation activities to improve operational excellence in Operations Management, particularly related to flight schedules and aircraft rotation. • Planning and strategic mapping for the latest version of an Enterprise Resource Plan (ERP) system to align with the recent technology that promotes cost efficiency in the maintenance of the ERP application system. • Communicating infrastructure updates by IP-based technology for both domestic and international networks which promotes cost efficiency in the communication network. Other initiatives accomplished in 2009 were the Laptop on Board program which was a sub program from the structure and weight management of a technical unit where a laptop was stationed in the cockpit to replace hardcopy documentation. Furthermore, on January 16, 2009, in order to support Customer Intimacy and Product Innovation, the Company introduced the Internet Booking Engine (IBE) service to provide its customers with convenience in making reservations and ticket purchases via the internet. Additionally, Garuda Indonesia also transformed its check in system by offering new services to customers through Kiosk/Self Service Check in as well as preparations to launch Mobile Commerce (Booking and Payment). In order to support these services, the Company

completed a renewal program for its information and communication technology by changing the legacy booking engine system to a Service Oriented Architecture (SOA)-based technology.

Another breakthrough that was equally essential for the IT field was the e-Procurement and e-Auction program used for each and every procurement process carried out at Garuda Indonesia. By utilizing this program, procurement of goods and services would continue to be processed in a transparent way according to Good Corporate Governance (GCG) principles. Moreover, this program could also support an efficiency program which is widely encouraged in the organization.

Garuda Indonesia also continues to strive for improvement and perfection of its website so that all customers can extract the most recent information on the Company as well as new programs being offered. This initiative was quite a success as reflected in the award obtained by the Company as Best of The Best Website SOE from the SOE Ministry in 2009.

Outlook For 2010 IT development will remain focussed on main business needs consisting of: operational excellence, customer intimacy, and product innovation. Initiatives to be implemented are as follows: • Implementing the latest SOA-based technology for Enterprise Resource Plan and offering new features which align with principles of financial system management that follow capital market standard and principles of global financial reporting standard known as IFRS (International Financial Reporting Standards) to support the Company’s plan to have an Initial Public Offering (IPO) and strengthen the implementation of GCG principles. • Implementing iMRO, (Integrated Maintenance, Repair and Overhaul) to improve operational excellence in Aircraft Maintenance and Engineering which will be integrated from aircraft refurbishment plans, to documentation until execution.

• Further implementation of IOCS (Integrated Operations Control System) to enhance operational excellence in Operations Management, particularly cabin crew management. • Implementing updated PSS (Passenger Service System) to improve operational excellence in the area of reservations and RMS (Revenue Management System) as a preparation to join one of the global alliances (Skyteam). • To provide accurate, timely and complete information to support decision-making processes and management reporting analysis, through Business Intelligence (BI) technology on the Performance Management Application System (PMS) and Route Profitability Analysis. • Updating communication and office used technology through a UC (Unified Communication) application to support integration and collaboration for IT utilization. • Planning and Implementing Cargo IT integrated solutions in order to have cargo capacity information based on market, passenger segmentation, type of goods and be real time for effective cargo planning to maximise revenue.

• Developing technology alternatives to interact with customers, such as introducing and developing internet and mobile commerce applications. • Planning for Customer Relationship Management application through business process strategy & roadmapping that is in line with the Company’s business strategy. • Developing social media technology and solution application through unified communication in several branch offices. • Developing and expanding services for customers as well as updating the technology to do redesign and reengineering of online Internet & Mobile Booking Payment services. With all these initiatives, the Company’s IT is expected to continue developing, thus placing Garuda Indonesia as one of the most advanced IT carriers in Indonesia.

Throughout 2009 Garuda Indonesia continued to uphold its commitment towards the consistent implementation of Good Corporate Governance (GCG). The implementation of GCG was actually initiated with the signing of a ‘Declaration of Joint Commitment’ on April 1, 2003 by the Board of Commissioners, the Board of Directors, and Senior Executives. Being fully aware of the importance of GCG, the Company is committed to create a working framework for the implementation of GCG as mandated by the shareholders. Accordingly, throughout 2009, the Company continued to strive to improve the quality of GCG implementation through the establishment of solid governance infrastructure as well as sound management processes. The Company believes that the practice of GCG is a key aspect in maintaining the trust of stakeholders, as the Company moves towards becoming Good Garuda Citizen.

In an overall sense, Garuda Indonesia has complied with all stipulations as required by prevailing regulations and guidelines on corporate governance. The Guidelines for Corporate Policies (PKP) that serve as a mechanism in the corporate governance systems have been used as reference in the formulation of the Company’s operational policies. The Company’s approach in the development and implementation of GCG is through the alignment between various corporate governance programs undertaken by the Company and the strategic plans of the Company, as can be seen in the following schematics:

In addition, with the formulation of the Board Charter for Commissioners and Directors that define the work relation between the Board of Commissioners and the Board of Directors, Garuda Indonesia has underlined the principles of Accountability, Responsibility and Independency in the implementation of GCG at the Commissioner, Director, and Committee levels, in accordance with best practice in GCG implementation. The GCG Report was made based on Corporate Governance principles as issued by the National Committee on Corporate Governance at the end of 2006. In 2009, the Company reached the stage of ‘Good Governed Garuda’ in terms of GCG implementation in support of the Company’s growth strategy for the next two years.

Rating of GCG Implementation To assess its position relative to other companies and especially to public companies, Garuda Indonesia has participated for the first time in the rating survey for the implementation of GCG conducted by an independent institution, namely the Indonesia Institute for Corporate Governance (IICG). In 2009, the theme for the GCG rating survey was ‘GCG in the Perspective of Strategic Management’. Based on the survey results, Garuda Indonesia scored 81.59 points or in the category of ‘Trusted Company’. In the non financial non listed State Owned Enterprise category, Garuda Indonesia is placed at first rank, while in the overall category, Garuda Indonesia was ranked 11th out of 20 participants in the survey.

Signing of a Management Contract The commitment of the Board of Directors towards the achievement of 2009 Key Performance Indicators (KPI) was formalized in a Management Contract signed by the Commissioners, Directors, and Representatives of Shareholders. The Management Contract also includes a statement regarding the rewards or penalties in the event of achievement or failure to achieve the KPIs. The Management Contract Realization The 2009 Management Contract between the Shareholders and Board of Commissioners and Board of Directors was signed on January 5, 2009. The target set was 100, which included operational aspect of 50, financial aspect of 30 and dynamic impact aspect of 20. The score achieved was 89.8 in 2009, below the target of 100. The breakdown of the score was as follows: operational aspect of 45.64, financial aspect of 28.22 and dynamic impact aspect of 15.94.

GCG Structure The GCG framework is implemented through several functions or elements comprising the General Meeting of Shareholders, the Board of Commissioners and the Board of Directors as well as the various Committees. Each element has its own role and accountability towards an effective implementation of GCG. All of these elements carried out their respective functions in accordance with prevailing requirements, based on the principle that each shall perform its duties, function and responsibilities in a professional manner in the best interest of the Company. General Meeting of Shareholders As stated in the Articles of Association, the General Meeting of Shareholders (GMS) is the highest organ of the Company serving to facilitate the shareholders in making decisions regarding their investment in the Company. Resolutions taken in a GMS shall be made on the basis of the long-term interest of the Company.

Throughout 2009, Garuda Indonesia conducted: I. GMS regarding the Acceptance of Annual Report and ratification of Annual Accounts for fiscal year 2008 on May 27, 2009, with the following resolutions: 1. To accept the Consolidated Annual Report and ratified the Annual Accounts for Fiscal 2008 of PT Garuda Indonesia (Persero) and Subsidiaries that have been audited by the Public Accountant Firm (KAP) Aryanto, Amir Jusuf & Mawar for fiscal 2008 with a fair opinion. The highlights of the audited financial statements for fiscal year 2008 and the restated consolidated financial statements for fiscal 2007 are presented below:

2. To accept the Report of Partnership and Community Development Program for fiscal year 2008 of PT Garuda Indonesia (Persero) that was audited by KAP Aryanto, Amir Jusuf & Mawar for fiscal year 2008, in accordance with Minutes of Meeting No. RIS-16/SAM2.MBU/TSP-PKBL/A/2009 dated May 14, 2009 on the evaluation of the annual report and the report of the audit on the implementation of PKBL for fiscal year 2008 of PT Garuda Indonesia (Persero). 3. To acquit and discharge the Board of Directors and Board of Commissioners of PT Garuda Indonesia (Persero) of all responsibilities in the management and supervision activities conducted in fiscal year 2008, provided such activities are disclosed in the Audit Report of KAP Aryanto, Amir Jusuf & Mawar. However, such acquittal and discharge do not release the Board of Directors or Board of Commissioners from assuming legal responsibilities in the event that the information disclosed in such report is subsequently found to be in violation of prevailing laws and legal procedures and/or in the event of subsequent finding of irregularities and/or activities that are detrimental to the Company. 4. Utilization of Net Income of Fiscal Year 2008. The Company’s net income amounting to Rp 669,470,777,908 will be utilized as follows:

5. To confer full power and authority to the Board of Commissioners to appoint the Public Accountant Firm as Independent Auditor to conduct an audit of the Financial Statements of fiscal year 2009 of PT Garuda Indonesia (Persero). 6. To determine the remunerations for the Board of Directors and Board of Commissioners for 2009. 7. In recognition of performance in fiscal year 2008, the GMS authorized incentives for the Board of Directors, Board of Commissioners and the Secretary of the Board of Commissioners totalling Rp 11,326,500,000,000 with taxes payable by the beneficiaries. II. The GMS for the Ratification of Long-Term Corporate Plan conducted on 28 September 2009 with the following resolutions: 1. To ratify the long-term corporate plan of PT Garuda Indonesia (Persero) for 2010-2014 as proposed by the Board of Directors of PT Garuda Indonesia (Persero). 2. To ask the attention of the Board of Directors and Board of Commissioners on the following issues: a. With regards to fleet expansion, the Board of Directors should prepare a suitable financing scheme in view of the large amount required, while the Company still has past obligations that have not been fully settled. b. In implementing the long-term corporate plan, the Board of Directors should anticipate the strategy and work programs of competitors in order to remain competitive in the aviation industry. c. The Board of Directors should take advantage of the growth of cargo transport business that has shown higher growth compared to passenger transport, by optimizing on the Company’s fleet structure as well as by strategic cooperation with other airlines. d. The Board of Directors should prepare suitable anticipatory steps to be taken in the event of future deviation regarding certain assumptions taken during the implementation of the longterm corporate plan, in order to ensure as much as possible the achievement of established targets. e. The Board of Commissioners should supervise the implementation of the long-term corporate plan in accordance with its duties, function and responsibilities.

III. Decision of Shareholders Outside of the GMS of PT Garuda Indonesia (Persero) regarding the approval for the settlement and restructuring of the Company’s mandatory convertible bonds, No. 06.04/00/12/2009/001; No. BA.447/HK.09.01/2009-DU; No. KEP-257-257/MBU/2009, dated December 28, 2009 a. To approve the restructuring of the Mandatory Convertible Bonds with the following provisions: (i) the Company will settle approximately 5% of the principal of Mandatory Convertible Bonds, or the amount of Rp 50,940,000,000 in cash payment to Bank Mandiri, and (ii) the remaining amount of approximately 95% of the principal of the Mandatory Convertible Bonds, amounting to Rp 967,869,000,000 to be immediately converted into Rights from Bonds Conversion based on par value of Rp 1,000,000 per share, resulting in 967,869 new shares to be issued by the Company in accordance with conversion terms and conditions in line with prevailing laws and regulations. b. To approve the proposal of the Board of Directors for the issuance of 967,869 (nine hundred sixty seven thousand eight hundred sixty nine) new shares from the treasury stock of PT Garuda Indonesia (Persero), with a par value of Rp 1,000,000 per share, or a total value of Rp 967,869,000,000 (nine hundred sixty seven billion eight hundred sixty nine million Rupiah), representing an increase in the Company’s issued and fully paid-in capital in relation with the conversion of the Mandatory Convertible Bonds as described in point (a) above, to be exercised by Bank Mandiri. c. To authorize the Board of Directors to make amendments to Article 4 sub-article 2 and subarticle 3 of the Articles of Association in relation to the implementation of point (a) and point (b) described above, and d. To approve the waiver of rights based on Article 4 sub-article 5 of the Articles of Association regarding the right of the Company to participate in a rights issue by the Company, in relation to the implementation of point (a) and point (b) as described above.

IV. The GMS for 2009 Work Plan and Budget on January 5, 2009 with the following resolutions: 1. To ratify the 2009 Work Plan and Budget of PT Garuda Indonesia (Persero) as proposed by the Board of Directors of PT Garuda Indonesia (Persero). 2. To approve the 2009 Work Plan and Budget for the Partnership and Community Development Program (PKBL) of PT Garuda Indonesia (Persero) as a result of discussions with the PKBL Team. 3. To approve the write-off of uncollected receivables amounting to Eur 49,523, reflecting the difference between total outstanding receivables and payment received from Bell Tour, in so far as the process is in accordance with prevailing regulations. 4. To agree in principle for the sale of 7 (seven) units of B737-400 aircraft through ordinary sales or sales and lease back mechanism, to be implemented in accordance with prevailing regulations. 5. To agree in principle for the sale of non-productive assets, to be implemented in accordance with prevailing regulations. 6. To approve the equity participation in Citilink in the form of 2 (two) units of B737-300 aircraft, to be implemented in accordance with prevailing regulations. 7. To determine the remuneration and facilities for the Board of Directors and the Board of Commissioners. 8. The commitment of the Board of Directors and Board of Commissioners regarding targets set out in the 2009 Work Plan and Budget and regarding the implementation of other resolutions of this GMS shall be documented in a Management Contract on the basis of certain Key Performance Indicators (KPI), which will be an integral part of the resolutions of this GMS. Board of Commissioners and Board of Directors In carrying out their duties and authority and in the interest of relevant stakeholders (shareholders, employees, customers, the public, regulators and suppliers), the Board of Commissioners and Board of Directors shall act in accordance with GCG principles, namely in a transparent, accountable, responsible, independent and fair manner, and in line with existing ethical standards of the Company. Further, the Board of Commissioners and Board of Directors shall comply with all relevant prevailing laws and regulations, the Company’s Articles of Association, company rules, and to uphold responsibility towards the environment.

The Board of Commissioners and Board of Directors act as role model in upholding and implementing the core principles, ethics, values and rules of the Company, both to internal and external parties, and to carry out their duties in the best interest of the Company.

In addition, the Board of Commissioners and Board of Directors are responsible for sustainable business operations of the Company in the long term. This requires a common perception among Commissioners and Directors with regards to the Company’s vision, missions and core values. This is also in accordance with the Guidelines on GCG as issued by the National Committee on Governance Policies (KNKG) in 2006. The Board of Commissioners and Board of Directors are jointly responsible to ensure the Company’s longterm business continuity, as reflected in the excellent implementation of internal control and risk management, the achievement of optimum returns for shareholders, the protection of the interests of stakeholders in a fair manner, and the implementation of leadership succession in a fair manner in the interest of management continuity at all levels within the organization. In line with the Company’s vision, missions and core values, the Board of Commissioners and Board of Directors shall be in agreement over issues such as longterm plan, strategies, and annual work plan and budget. The Board of Commissioners and Board of Directors shall also agree on company policies in order to ensure compliance to laws and regulations as well as the Articles of Association, and to avoid any forms of conflict of interest. The two organs should also agree on policies and methods for company assessment, the work units in the organization, and its personnel. Duties of the Board of Commissioners and Board of Directors The duties and authority of the Board of Commissioners and Board of Directors are based on the Articles of Association, and are described in detail in the respective Board Charter signed by the Commissioners and Directors. The Board Charter represents an integral part of the Corporate Policy Manual. In discharging its function, the Board of Commissioners requires and is entitled to receive information from the Management and staff of the Company in the form of reports or consultation. To ensure a harmonious work relationship, the Board of Commissioners and Board of Directors shall agree on the kind of information to be

reported. If necessary, the Board of Commissioners could employ the assistance of a competent independent party on the expense of the Company.

The Board of Commissioners has the final say on strategic directions. The Board of Directors shall report to the Board of Commissioners regarding all activities related to the implementation of such strategic directions. Should the Board of Directors decide to engage in an activity that is not aligned with the strategic directions, such decision and reasons for doing so (in part or in whole) shall be properly documented and communicated to the Board of Commissioners prior to the implementation of such decision. The results of such activity shall also be reported in a timely manner. The duties and authority of the Board of Commissioners and Board of Directors are next elaborated to cover all other positions within the Company, creating an overall organizational system that is responsible, auditable and transparent. The Board of Commissioners established the division of duties among its members. To assist in its duties, the Board of Commissioners may appoint a Secretary of the Board at the expense of the Company. Duties of the Board of Commissioners • To supervise the policies of the Board of Directors in the management of the Company, including to advise the Board of Directors regarding the implementation of Long-Term Plan, the Work Plan and Budget, provisions in the Articles of Association, resolutions of the GMS, and prevailing regulations. • To monitor the effective implementation of GCG within the Company and to make adjustments as necessary. • To carry out any other tasks specifically given to the Board of Commissioners in accordance with the Articles of Association, prevailing regulations, and/or the resolutions of the GMS. Membership of the Board of Commissioners As of December 2009, the Board of Commissioners consisted of 5 members, of which two are Independent Commissioners. Brief profiles of the Board of Commissioners are presented in Corporate Data section of this Annual Report.

Share Ownership by the Board of Commissioners No member of the Board of Commissioners owns, directly or indirectly, shares in PT Garuda Indonesia (Persero) or its subsidiaries. Meetings of the Board of Commissioners The Board of Commissioners meet at least once a month, and may invite the Board of Directors to attend such meetings. Throughout 2009, the Board of Commissioners conducted 5 meetings to evaluate the performance of the Company, to identify relevant issues, and to recommend corrective measures to the Board of Directors. Meeting frequency and attendance at meetings of the Board of Commissioners are as follows:
Jumlah Rapat Number of Meeting 5 5 5 5 5 Kehadiran Attendance 5 4 2 4 3

Duties of the Board of Directors As a Company organ, the Board of Directors carries out its duties and is collectively responsible in the management of the Company. Each Director performs the duties and makes decisions in accordance with the assigned duties and authority. However, the implementation of duties of each Director remains a collective responsibility. Each Director including the President Director has an equal standing. The President Director is primarily responsible for coordinating the activities of the Board of Directors.

The main duties of the Board of Directors are as follows: • To lead and manage the Company in accordance with the Company’s objectives, and to carry out its duties in good faith and in a responsible manner for the business interest of the Company • To safeguard and to manage the assets of the Company • To implement the principles of Good Corporate Governance (GCG) within the Company • Together with the Board of Commissioners, to formulate the vision and mission of the Company • To prepare long-term strategic plans containing the desired targets and objectives to be achieved in a 5-year period. The long-term strategic plan that has been signed together with the Board of Commissioners is submitted for approval by the GMS. • To keep minutes of meetings and to maintain records and administration of the Company in line with the usual practice of a business entity. • To prepare and submit an annual report in accordance with prevailing regulations, signed by all members of the Board of Directors and Board of Commissioners, to be submitted for ratification by the Annual General Meeting of Shareholders, as well as to prepare and submit other reports as required by the Shareholders. • To be responsible for the formulation of policies and commitments on aviation safety and security, and in ensuring that company officials one level below the Director are responsible for the implementation of such policies.

• To ensure that the Company has the necessary mechanisms in place in order that all employees are aware and have a commitment to aviation safety and security. • To ensure that the Company maintain a respectable position in the aviation industry through continuous investments with regards to aspects of flight safety training, flight safety systems and technology, and flight security. • To implement all necessary measures for the effective handling and communicating of issues regarding safety, security and compliance to regulations. • To ensure the effective implementation of internal checks on flight safety. • To ensure the active participation by each employee in the internal safety and security checks, including but not limited to those involving a third party, suppliers and ground handling crews. • To ensure that each employee possesses adequate skills and knowledge in order to perform their safetyrelated jobs and functions according to established standards. • To formulate and implement a corporate risk management system that encompasses all aspects of the Company’s activities. • To formulate and implement a reliable internal control system in order to safeguard assets, maintain performance, and comply with all relevant regulations • To ensure the smooth flow of information between the Company and its diverse stakeholders by empowering the Corporate Secretary function. • To ensure that the Company has fulfilled its corporate social responsibility commitments in order to sustain its business activities in the long run. • To ensure that the Company has taken into consideration the interests of stakeholders in a fair and just manner. • To engage in any other such tasks and duties as described in the Articles of Association. Specific Responsibilities of Respective Directors: • EVP Commercial Services: responsible for achievements in Sales, Revenue and Services through the integrated management of business networks, marketing, revenue and services. • EVP Operations Services: responsible for flight operations through the management of flight crews, ground operations, flight dispatch, operation control, and other operations support functions.

• EVP Engineering & Maintenance Services: responsible for the availability of airworthy aircrafts at all times through the management and control of aircraft maintenance activities. • EVP Corporate Strategy & IT Services: responsible for the formulation of long-term strategy and plans as well as the support of reliable Information Technology systems. • EVP Financial Services & Group CFO: responsible for financial management through the management of treasury, budgeting, accounting and assets. • EVP Human Capital & Corporate Support Services: responsible for the management of Human Resources as well as general and administrative services. Membership of the Board of Directors At present, the Board of Directors consists of 7 Director. Each Director possesses the necessary competence to handle various business needs. The Company has defined the authority and responsibilities of each Director for the respective function. A clearly set division of authority and responsibilities will result in better accountability and level of commitment on the part of each and every Directors to fulfill their respective responsibilities and duties.

Share Ownership of the Board of Directors No member of the Board of Directors owns, directly or indirectly, shares in PT Garuda Indonesia (Persero) or its subsidiaries. Meetings of the Board of Directors The Board of Directors and Board of Commissioners as well as the various committees held regular meetings to identify and discuss various issues including the prevention of possible problems. Meetings of the Board of Directors are held as deemed necessary by one or more of the Directors, or on the written request of one or more of the members of the Board of Commissioners or the majority Shareholders, by informing the agenda to be discussed.

Remuneration for the Board of Commissioners and Board of Directors Remuneration for the Board of Commissioners consists of service compensation, transportation benefits, telephone facility, health facility, flight facility, business trip allowance, and pension benefits, the amount of which is determined by the Annual GMS. Remuneration for the Board of Directors consists of salary, housing facility or compensation, company car, health facility, utility facility (water, electricity, gas), telephone facility, flight facility, annual leave benefits, dress allowance, daily allowance, business trip allowance, and pension benefits, the amount of which is recommended by the Board of Commissioners and approved by the GMS. For 2009, total remuneration in the form of salaries, benefits and incentives for the Board of Commissioners and Board of Directors amounted to Rp 28,977,854,407 detailed as follows:

Training for the Board of Directors Garuda Indonesia provides members of the Board of Directors with a variety of training sessions both internal as well as external, in order to improve their knowledge and skills as well as to keep them up to date with the latest developments in economic conditions.

Training may take the form of a structured briefing from senior company officials in their respective fields of responsibility as well as external executive courses in relevant subject matters. In addition, the Board of Directors is regularly briefed on new regulations, new developments in corporate governance practices and information technology, current issues in risk management, as well as changes in accounting standards.

Committees under the Board of Commissioners and Board of Directors In discharging its supervisory function, the Board of Commissioners is assisted by the Audit Committee, the Corporate Governance Policy Committee, and the Risk Policy Committee at the Board level. Each Committee has its respective duties and responsibilities as approved by the Board of Commissioners, and sets out in the respective Committee Charter. Audit Committee The Audit Committee assists the Board of Commissioners in reviewing financial information to be published and in monitoring evaluation reports from Internal Audit to the Audit Committee and Board of Commissioners regarding risks faced by the Company and the implementation of risk management by the Board of Directors. The Audit Committee also reviews and reports to the Board of Commissioners on issues related to the Company. Each member of the Audit Committee is required to sign a Statement of Compliance to the Audit Committee Charter and a Statement of Conflict of Interest periodically, at least once a year.

In discharging its supervisory or control duties, the Audit Committee is guided by international best practices for audit committees (Blue Ribbon Committee, Hampell Report, etc) as well as by the code of conduct and other standards related to an audit committee. In addition, the Audit Committee is also guided by ethics and norms as contained in the Audit Committee Charter, which forms an integral part of the Company Policy Manual. The Audit Committee shall ensure that each function related with supervision and control understands the prerequisites demanded in line with the ethics and norms of supervision and control. The Audit Committee is also responsible to identify violations to such pre-requisites. In the event of a violation occurring, the Audit Committee shall report such violation to the Board of Commissioners.

Membership Changes of the Audit Committee Farida Astuti was appointed as member of the Audit Committee based on Decree of the Board of Commissioners of PT Garuda Indonesia (Persero) No. JKTDU/SKEP/5021/08 dated April 1, 2008, and effective since March 1, 2009 she resigned based on Decree of the Board of Commissioners of PT Garuda Indonesia (Persero) No. JKTDU/SKEP/5012/09 dated March 6, 2009. Subsequently, the Board of Commissioners appointed Adi Dharmanto as member of the Audit Committee based on Decree of the Board of Commissioners of PT Garuda Indonesia (Persero) No. JKTDU/SKEP/5011/09 on the Appointment of Member of the Audit Committee of PT Garuda Indonesia (Persero) dated May1, 2009. Brief Profile of the Audit Committee A brief profile of the Audit Committee is described in the corporate data section of this annual report. Corporate Governance Policy Committee The Corporate Governance Policy Committee was established based on Decree of the Board of Commissioners No. JKTDU/SKEP/5045/08 dated November 1, 2008, and assigned the duty of assisting the Board of Commissioners in performing a comprehensive review of GCG policies at PT Garuda Indonesia (Persero) and the consistency of their implementation. In discharging its duties, the Corporate Governance Policy Committee shall submit a periodic report to the Board of Commissioners at least once every quarter, as well as special reports in the event of findings that are deemed to be detrimental to the effectiveness of the Company. Membership of the Corporate Governance Policy Committee comprises Wendy Aritenang (Chairman and Member), G. Suprayitno (Member) and Baitul Ihwan (Member). Brief Profile of Corporate Governance Policy Committee A brief profile of the Corporate Governance Policy Committee is described in the corporate data section of this annual report. Identified Issues for Follow-Up The Corporate Governance Policy Committee recommended that the Board of Directors attend GCG related seminars in order to broaden its horizon on GCG.

Risk Policy Committee In order to review the risk management system established by the Company and to assess the risk tolerance acceptable by the Company, Garuda has established a Risk Policy Committee based on Decree of the Board of Commissioners No. JKTDU/SKEP/5046/08 dated November 1, 2008. The Risk Policy Committee assists the Board of Commissioners in reviewing the integrated risk management system that has been formulated and implemented in the Company and to assess acceptable risk tolerance of the Company. In discharging its duties, the Risk Policy Committee shall submit periodic reports to the Board of Commissioners at least once every three months, as well as special reports on findings that are estimated to have adverse effect on the activities of the Company.

Corporate Safety Committee The Corporate Safety Committee is established to discuss issues related to flight safety. Meetings of the Committee are held at least once every 6 (six) months or as needed. These meetings are attended only by personnel at EVP level, and chaired by the President Director. In its supervisory and control function on matters related to flight operations, the Committee has the following duties and authority: • To assist efforts in maintaining and improving flight operational quality and safety assurance.

• To assess and report on the level of compliance of mandatory items with respect to Company standards and international standards, including technical standards and flight aviation safety standards.

Internal Supervisory and Control Policy The policies for internal supervisory and control comprise comprehensive policies for supervision and internal control at the Company at the Board of Commissioners, Board of Directors, senior executives and staff level. Supervision and internal control also includes embedded internal control on qualitative and quantitative financial and non-financial aspects at every business unit, including supporting units, Audit Internal, Audit External, and Risk Management units.

Implementation of Supervision and Internal Control The Board of Commissioners is responsible for the coordination and implementation of supervisory and internal control functions. According to the Articles of Association, the Board of Commissioners is the highest company organ responsible for control and supervisory function assisted by the Audit Committee. In the actual implementation of this function, the Internal Audit unit (SPI) has an active role towards the achievement of Company’s objectives by evaluating and recommending improvement measures on risk management, internal control and governance processes, undertaken by systematic and proven work procedures. Administratively, SPI is responsible to the President Director while functionally reporting to the Audit Committee. Internal Audit provides consultation services as well as independent and objective evaluation through analysis, assessment and recommendations related to internal control, governance processes and risk management, in order to improve the effectiveness and efficiency of the Company.

The scope of activities of Internal Audit comprises reviews on internal control, governance process and risk management, including regular audit, handling of public complaints, special audit, assessment on compliance to laws and regulations, improvement in the work quality and performance of internal audit, and synergy with external auditors and the Audit Committee. Internal Audit is independent to the activities being audited. The independence status of Internal Audit is ensured through its structure in the organization whereby Internal Audit is directly responsible to the President Director and the Audit Committee. The relation between the Audit Committee and Internal Audit is clearly established in accordance with the Audit Committee Charter and the Internal Audit Charter. Should a specific audit assignment be deemed to contain a conflict of interest or interfer with the independency of Internal Audit, the Audit Committee may appoint an independent third party to conduct the audit. The Company also has embedded internal control with regards to supervision and control functions, including: • Supervision and control of funds utilization or realization with regards to the established budget. • Embedded internal control and supervision at business units including supporting units representing functions existing at staff level and responsible to the Director in charge of the respective business unit. The embedded internal control and supervision function at this level is in the nature of preventive control, in order to ensure aspects of compliance and the fulfillment of established pre-requisites prior to the implementation of an activity. • Supervision and control functions related to flight operation activities based on stipulations of the Civil Aviation safety Regulation (CASR), International Civil Aviation Organization (ICAO) and other such regulations are undertaken by the Corporate Safety Committee. • Supervision and control of funds utilization or budget realization with regards to established budget is undertaken by the Corporate Control unit.

Non-PKPT audit assignments meanwhile were: 1. Audit on sales outlet management 2. Evaluation of irregular costs 3. Evaluation of crew health management 4. Evaluation on implementation of cargo information technology 5. Audit of online payment 6. Audit of employee indiscipline at BTH branch office 7. Audit on procurement of goods and services at Jakarta branch office 8. Audit on cargo at Medan branch office 9. Evaluation of e-Ticketing at Riyadh branch office 10. Evaluation of Company vehicle facility 11. Audit on aircraft utilization 12. Evaluation of MMR procurement 13. Audit on code share. In addition, Internal Audit also conducted special audits and evaluation on complaints from customers as well as from internal parties, comprising: - Customer complaint regarding service quality of ticketing personnel at GA Express counter at Denpasar BO - Customer complaint regarding flight reservation at Bandung BO - Misappropriation of customer deposit at Jakarta BO - Non-procedural handling of irregularity at Makassar BO. The implementation of the 2009 work program has resulted in 160 recommendations, of which some 146 recommendations have been followed-up, while the remainder were still in process, including improvements to procedures, adequacy of documentation, inter-unit coordination, and recommendations that needed the attention of the Board of Directors. The process for the follow-up measures include coordination and discussions with the respective units to update the follow-up measures, to improve the results of audit, and to support better efficiency. In the meantime, SPI also works with the Audit Committee through routine reports at least once a month where the SPI reported developments in audit findings, open items or follow-up to audit findings, discussions on financial statements and recent issues in the Company. The Audit Committee may also ask the Internal Audit unit to perform an audit for a specific purpose.

Aside from relation with the Audit Committee, Internal Audit also interacts with external auditors such as BPKP, BPKRI and Public Accountant Firm, in order to facilitate the audit process by those auditors. Internal Audit also implements and reports on the follow-up of audit findings by external auditors, as well as consults with external auditors in the implementation of internal control, risk management and GCG. In 2009, the Internal Audit unit cooperated with an educational institution, YPIA, to conduct a pre-managerial level continuing education program for 27 employees. Three auditors from subsidiary companies were also sent to attend the training program.

In order to add value and to improve the quality of audit findings, the Internal Audit unit engaged in regular reviews and evaluation of Standard Operating Procedure on audit. Among other things, in 2009 Internal Audit introduced the utilization of Informatics Technology in the mechanism for follow-up measures, updating of work papers, and other processes. External Auditor/Public Accountant Independent supervision on financial aspects of the Company is conducted through an audit by external auditors of a Public Accountant Firm (KAP). Based on Decree of the Board of Commissioners No. 035/DEKOM/KEU-12/IX/09 dated September 15, 2009, KAP Osman Bing Satrio & Rekan (Deloitte Touche Tohmatsu) was appointed as the Independent Auditors that will perform the audit on the Consolidated Financial Statements, Work Evaluation, Financial Statements of the PKBL, Excess Cash Report, and Compliance to Laws and Regulation and Garuda Indonesia Internal Control for fiscal year 2009, for a total fee of Rp 2.5 billion.

External auditors or public accountants represent an independent supervisory function on the Company’s financial aspects, and performed by a Public Accountant Firm (KAP). KAP Osman Bing Satrio & Partners as Independent Auditors has performed the audit on the Consolidated Financial Statements, Work Evaluation, Financial Statements of the PKBL, Excess Cash Report, and Compliance to Laws and Regulations and Garuda Indonesia Internal Control for fiscal year 2009.

Risk Management The Company realizes that a variety of risks are inherent in its operational activities, comprising risks under its control as well as those that are outside of its control. Therefore, risks cannot be ignored and instead, must be managed in an integrated, optimum and continuous manner as an inseparable part of the practice of good corporate governance at the Company. Each individual should be responsible for managing risks, and therefore each and every employee should be fully aware of risks related to his/her job and to proactively manage those risks. In mid-2008, the Company established an ERM (Enterprise Risk Management) project team to develop a framework and infrastructure for the implementation of an integrated and effective enterprise-wide risk management. In the second quarter of 2009, the initial implementation of the ERM project began towards in formal and systematic implementation of an integrated enterprise risk management.

Initiatives in Risk Management Various initiatives towards the implementation of enterprise-wide integrated risk management were undertaken throughout 2009, including: • Awareness sessions for the Board of Directors, personnel at VP level and to designated Key Risk Officers, which will facilitate the implementation of risk management at their respective units. • Workshops on risk management for Key Risk Officers, in order to equip these personnel with the necessary knowledge and skills to facilitate the implementation of risk management at their respective units. • The development of a corporate risk profile from the process of risk identification, risk assessment and risk responses. The risk profile will determine the priorities in risk management as well as the amount of resources needed to manage those risks. • The formulation of an ERM Manual as a guideline for business units in the implementation of risk management. • The establishment of an ERM unit headed a VP level personnel and reporting direct to the President Director. The ERM unit provides input and deliberation on decision making involving risk management at every business unit and function, coordinates all risk management activities, and performs comprehensive risk monitoring for all Company business units.

Risk Management Governance In the organization structure, the Board of Management holds full responsibility for the direction and policies of risk management at the Company. To coordinate its implementation in operational activities, the Company established an ERM unit (headed by a VP) that is independent of operational units as well as the Internal Audit unit, and reports directly to the President Director. Risk management activities will be reviewed by the Risk Policy Committee, which is an organ of the Board of Commissioners. In 2009, the Company set a target for the integration of risk organization, risk transfer strategies and risk management into the various Company business processes. This is not an easy task. The implementation of ERM needs years of effort as well as continuous support from top level management and investments in human and technological resources. The development of risk management competence has also started at the subsidiary level, with the aim of establishing a synergy in group-wide risk management within the next several years. Accordingly, programs in 2009 were focused on developing risk management competence and infrastructure. Through suitable organizational processes and control for the measurement and management of inter-company risks, the Company could expect improvements in organizational effectiveness, risk reporting capability, and business performance.

The Company strives to ensure that its activities are not solely profit-oriented, but also contribute to maintain operational continuity as well as a positive image and reputation in the eyes of stakeholders. This continuity is important in order to protect the interest of employees, service users, shareholders, the environment, communities and other concerned stakeholders. Therefore, effective risk management represents a vital element that should be considered by the Board of Commissioners, the Board of Directors and every Company employee. All Executive level personnel have a responsibility to manage risks arising over the entire process path from pre-process, process and post-process.

As a company in the domestic and international aviation sector, Garuda Indonesia faces a variety of risks, which can be grouped into: • Strategic risks (reputational) are risks arising from the occurrence or non-occurrence of a decision that may have an impact on the achievement of the Company’s strategy. • Operational risks are risks that arise directly or indirectly from the failure or inadequacy of control processes, due to factors concerning human resources, systems or events external to the Company. • Financial risks are risks of financial loss arising directly or indirectly due to fluctuations in currency exchange rates, prices of fuel, changes in interest rates, or the inability of counterparts to meet their liabilities to the Company. • Hazardous risks are risks arising from acts of terrorism, changes in political condition, weather condition, business interruptions, general liability, and thirdparty liability.

In managing risks at Garuda Indonesia, risk management has become an integral part of the process for planning, reporting and control assessment, with the Company striving to involve the skills and knowledge residing in personnel at all functions within the organization.

Amendments to the Articles of Association The Company last amended its Articles of Association through the Decree of the Minister for Justice and Human Right No. AHU-AH.01.1023939 dated December 31, 2009, concerning changes to Article 4 of the Articles of Association on Equity Capital of the Company.

Disclosure and Access to Information The culture at Garuda Indonesia emphasizes honesty and due appreciation for others. The ability of the Company to conduct an efficient business in the domestic and international markets depends also on professional and consistent communication. Accordingly, in its communication to shareholders and related stakeholders, the Company engaged in a policy for fair disclosure of information with due considerations to the principles of equitable treatment and transparency. Activities in communication to external parties are coordinated under the Corporate Secretary function.

The Corporate Secretary unit is responsible for the effective coordination of company communication through the printed and electronic media, in order to ensure the integrity and credibility of company information released to the public. The public have access to company data and information through a number of communication media, including: the Company’s website at http://www.garuda-indonesia. com; annual reports; press conferences; press releases; regular meetings between Garuda Management and the Editors Club; Management visits to segmented media to present the latest information on the Company; Garuda Inflight Magazine; participation in exhibitions featuring product/service knowledge or corporate information; visits from the mass media, related institutions or community groups interested in Garuda Indonesia; hearings at the DPR-RI; and seminars with Garuda Management as speakers.

Corporate Secretary The Corporate Secretary has an important role in ensuring aspects of transparency at the Company. Within the organization structure, the Corporate Secretary reports directly to the President Director regarding its responsibilities in handling communication to the public as well as internal parties and in handling data about the Company.

In line with preparations for the planned IPO in 2010, the Management of Garuda Indonesia in 2009 has established a Corporate Communication unit separately from the Corporate Secretary unit. Currently, Pujobroto serves as Corporate Communication while Ike Andriani serves as Corporate Secretary. Brief profile of Corporate Secretary A brief profile of Corporate Secretary is described in the corporate data section of this annual report.

Significant Litigation Cases From time to time, the Company is involved in litigation cases or lawsuits from third parties related to the operational and business activities of the Company. The following is a list of significant litigation cases involving the Company in 2009:
Materi Perkara Subject Meninggalnya penumpang Passengers’ Death Pemutusan perjanjian Cancellation of Agreement Posisi Position Tergugat Defendant Status Perkara Case Status Kasasi Appeal

With regards to the litigation cases listed above, none are significant enough to have a negative impact on the Company’s business activities and financial condition should the cases be decided against Garuda Indonesia.

GCG Awareness In the interest of increasing the level of awareness on Corporate Governance and its implementation, the Company regularly conducts GCG socialization in the form of articles on GCG-related issues, which are distributed to all email addresses in the Company as well as publishing online through Company’s internal electronic media. In 2009 there were 6 (six) articles that were published.

General Principles of Business Ethics In the conduct of business activities, employees are bound by the following principles: • Equal treatment and respect for others: The Company and its employees respect and treat each other with the dignity of fellow human beings and in accordance with prevailing norms in the aviation industry and the profession of airlines. • Fair competition: The Company and its employees uphold fair competition on the basis of capability for achievement. • Conflict of interest: The Company will not tolerate any decisions, and especially decisions that have a direct impact on the achievement Company KPI (Key Performance Indicators), that are influenced by the personal interest of Commissioners, Directors, Senior Executives and Employees, in the work relation among employees or relations with external parties. • Involvement in criminal and pornographic acts: The Company will not tolerate any action in connection with any criminal act.

In its implementation, these principles are further strengthened with the Corporate Culture that was introduced in 2007. This culture is based on five new core values, namely Efficient & Effective, Loyalty, Customer Centricity, Honesty & Openness, and Integrity, better known by the slogan FLY-HI. Through FLY-HI, the Company strives to transform its corporate culture from being ‘supportive’ and ‘rules oriented’ into one that is more ‘goal oriented’ and ‘innovative’. Supervision and Control Systems To ensure an effective supervision and control function at all levels of the organization, Garuda Indonesia has developed policies on Supervision and Control involving

the supervision and control functions at the Board of Commissioners, Board of Directors, Senior Executives, and staff level. Supervision and control activities involve qualitative as well as quantitative financial and non-financial aspects, with the aim of achieving an optimum balance of quality, delivery and costs, in striving towards the Company’s objectives as well as maintaining and increasing the satisfaction of service users. In the implementation of its duties, the supervision and control function should consider at all times the interests of the Company, the shareholders and related stakeholders (service users, employees, the public and the country) in line with the framework defined in the Company’s vision, mission and objectives. Responsibility for the coordination and implementation of supervision and control function rests with the Board of Commissioners. This includes the embedded internal control and supervision function in each business units as well as supporting units, Internal Audit, external audit, and Assurance and Risk Management function.

The Board of Commissioners is assisted by the Audit Committee in coordinating such activities. Activities in supervision and control are carried out by the Internal Audit unit and/or the embedded control function at business units. Each supervision and control function should be independent in the implementation of its duties, with no other interest than serving the purpose of the Company in line with its vision, mission, objectives and strategies.

Supervision and Control Organization In accordance with the Articles of Association, the Board of Commissioners is the highest company organ responsible for the implementation of supervision and control function with the assistance of the Audit Committee. In the daily activities, the Internal Audit unit (SPI) has an active role in support of the achievement of Company objectives by performing evaluations and making recommendation for the improvement of risk management, internal control and governance processes through a systematic and proven work process. Administratively, SPI is responsible to the President Director and functionally reporting to the Audit Committee. Should a specific audit assignment is deemed

to contain a conflict of interest or interfering with the independency of Internal Audit, the Audit Committee may appoint an independent third party to conduct the audit. The Company also has embedded internal control with regards to supervision and control functions, including: • Internal control and supervision function at business units including supporting units. • Supervision and control of funds utilization or budget realization with regards to established budget. • Supervision and control function related to flight operation activities based on stipulations of the Civil Aviation safety Regulation (CASR), International Civil Aviation Organization (ICAO) and other such regulations.

Embedded internal control and supervision at business units including supporting units represent functions existing at staff level and responsible to the Director in charge of the respective business unit. The embedded internal control and supervision function at this level is in the nature of preventive control, in order to ensure aspects of compliance and the fulfilment of established pre-requisites prior to the implementation of an activity.

Supervision and control function related to flight operation activities based on stipulations of the Civil Aviation safety Regulation (CASR), International Civil Aviation Organization (ICAO) and other such regulations is carried out by the Corporate Safety Committee. This Committee is specially established to discuss issues related to flight safety on a regular basis or at least once every 6 (six) months. In its supervisory and control function on matters related to flight operations, the Committee has the following duties and authority: • To assist efforts in maintaining and improving flight operational quality and safety assurance. • To assess and report on the level of compliance of mandatory items with respect to Company standards and international standards, including technical standards and flight aviation safety standards.

The supervision and control of funds utilization or budget realization with regards to established budget is undertaken by the Corporate Control function.

The relation between the Audit Committee and Internal Audit unit should be clearly defined based on the Audit Committee Charter and the Internal Audit Charter. Each Internal Audit personnel periodically signs a statement of compliance to the Internal Audit Charter and a Statement of Conflict of Interest. The Audit Committee Charter and the Internal Audit Charter are reviewed from time to time to reflect the dynamics of the Company.

Ethics and Norms in Supervision and Control The prerequisites of ethics and norms in supervision and control are: • In carrying out the duties of supervision and control, Internal Audit is guided by the Standard for Professional Practice of Internal Auditing and Code of Ethics issued by the Institute of Internal Auditors (IIA), Auditing Norms, and the Internal Audit Charter as well as any other regulations related to internal audit. The ethics and norms of Internal Audit are formalized in the Internal Audit Charter that forms an integral part of the Corporate Policy Manual.

• The implementation of supervision and control function should upholds the following principles: - Independency: having no other interest other than the purpose of the Company in accordance with its vision, mission, objectives and strategies. - Objectivity: having no relation with the activity being audited, free from conflict of interest during the time of assignment or audit on the respective function, and is not in a subordinate position to the party being audited. - Confidentiality and prudence - The supervision and control function should be undertaken by personnel having the combined knowledge, skills and experience necessary to conduct the audit, and should be guided at all times by the Company’s code of ethics, general policies on risk management, and prevailing regulations.

Decisions regarding violation of the principles inherent in code of ethics issued by the Institute of Internal Auditors (IIA) are determined by the Board of Commissioners and Board of Directors and carried out by or coordinated through the Human Capital Management function. Results of GCG Assessment The GCG Assessment in Garuda Indonesia in 2009 resulted in a Good rating with a score of 80.79.
Capaian Perusahaan Attained Score 6,99 6,84 19,42 5,29 22,21 2,66 2,70 52,28 6,64 8,05 80,79

As a follow-up to the assessment results, a mapping of the recommendations from BPKP has been made concerning issues for the attention of the related parties or functions as follow:
Pihak Terkait Related Parties

Plans for GCG Improvement in 2010 As a dynamic corporation, Garuda Indonesia is aware of the increasing demand year after year for better systems, infrastructure and implementation of Good Corporate Governance. Accordingly, the Company has made the following plans for improvements: 1. Continuing with the establishment of committees of the Board of Commissioners, namely the Nomination and Remuneration Committee. 2. Continuing with the establishment of committees under the Board of Directors, namely the Ethics Committee. 3. Strengthening the policies and practice of corporate governance. 4. Continuing with the socialization of GCG policies and practices to employees, suppliers, business partners and customers. 5. Continuing with training and development programs for Commissioners and Directors in order to improve the understanding and knowledge of Good Corporate Governance. 6. Continuing with the internalization program for FLYHI corporate values in aspects of leadership, systems and employees. 7. Continuing with the integration of corporate manuals in order to have better control over those manuals. 8. To establish rules on the Whistle Blowing System. 9. To review the Code of Corporate Governance. 10. Participate in the GCG Implementation Rating by IICG.

In discharging its supervisory function, the Board of Commissioners is assisted by the Audit Committee, the Corporate Governance Committee, and the Risk Policy Committee at the Board level. Each Committee has its respective duties and responsibilities as approved by the Board of Commissioners, and sets out in the respective Committee Charter.

Audit Committee Report A. Reporting Period Reporting period is one year, from January to December 2009. B. Meeting Frequency In conjunction with PT Garuda Indonesia (Persero) Audit Committee Charter, the Audit Committee conducts regular meetings with Internal Audit (SPI) Garuda Indonesia. In addition, should it be deemed required, the Audit Committee also conducts and attends other meetings with Garuda Indonesia’s internal business units as well as the Board of Commissioners and Directors. During the course of 2009 the Audit Committee conducted 12 meetings with internal business units and SPI of PT Garuda Indonesia. Details of attendance are as follows:

Keterangan Notes Ketua Komite Audit Chairman of the Audit Committee Mengundurkan diri dari Komite Audit per 30 April 2009 Resigned from the Audit Committee as of April 30, 2009 Anggota Komite Audit Member of the Audit Committee Diangkat sebagai anggota Komite Audit per 1 Mei 2009 Appointed as member of the Audit Committee on May 1, 2009

3. Reviewed 2008 Annual Management Report 4. Appointment of 2009 Registered Public Accountant a. Request for the appointment of Registered Public Accountant b. The appointment of Registered Public Accountant 5. Other Reviews a. Proposal of Removal and Replacement of Fixed Assets (Land in Padang) b. Citilink Examination Results c. Important matters to be examined by Management 6. Realization of SPI 2009 Working Plan SPI has 2 types of programs: Scheduled Supervision Programs (PKPT) and Non-PKPT Inspection Programs (special audits). Details of the implementation of the work plan are as follows: During 2009 SPI has targeted 40 PKPT and the target wes achieved. For special audits, SPI accomplished 12 inspections from the targeted 8 inspections.

Of the 52 letters issued, as many as 34 LHP reports have been issued; 8 reports are still in progress and field work of 10 inspections were completed.

7. Preparation of the Implementation of Audit Committee Activities In order to fulfill the reporting obligations of the Audit Committee on the implementation of Audit Committee activities as stated in the Charter of the Audit Committee, the Audit Committee has submitted a report on the Implementation of Audit Committee Activities. a. Activity Implementation Report of the Audit Committee for the Year 2008 b. Activity Implementation Report of the Audit Committee for 1Q 2009. c. Activity Implementation Report of the Audit Committee for 2Q 2009 d. Activity Implementation Report of the Audit Committee for 3Q 2009

8. Other Activities • The Audit Committee conducted intensive meetings with the Directorate of Finance and Accounting as well as Registered Public Accountant in relation to the adoption of PSAK No. 30 on Leases and PSAK No. 16 on Fixed Assets and disclosure on financial statements in general. The Audit Committee has presented its suggestions relating to the implementation of the above PSAK and their impact on corporate reporting and Company financial performance as well as disclosure of information that must be conducted by the Company. • The Audit Committee also played an active role as a source in 2008 Annual Report of PT Garuda Indonesia (Persero) Workshop held by the Company’s Corporate Secretary in January 2009, which was also carried out by PT Garuda Maintenance Facility Aero Asia in March 2009. The occasion was a cooperation between The Audit Committee and the Good Corporate Governance Committee. The workshop aimed to improve the presentation and disclosure of information in the Company’s Annual Report in accordance with the criteria of the Annual Report Award (ARA). • The Audit Committee played an active role in providing input to the Company’s Corporate Secretary with regard to the preparation of the Annual Report 2008 PT Garuda Indonesia (Persero). Input and suggestions were given with the aim of improving the presentation and disclosure of information in the Company’s Annual Report in accordance with ARA criteria which emphasize good corporate governance rating. In the announcement of ARA on August 12, 2009, PT Garuda Indonesia was awarded as the winner in the category of Non-Finance Non-Listed SOEs.

• The Audit Committee plays an active role in providing input to management relating to the appointment of the 2009 Registered Public Accountant. Input is given in the form of participation in technical testing of the Registered Public Accountant. In addition, suggestions are also submitted orally or in writing relating to the procedure for determining the Registered Public Accountant. Procedure for determining the proper accounting firm needs to be done to ensure that Company plans to issue securities in the capital market can be implemented according to plan.

Implementation of Corporate Governance Policy Committee Report A. Reporting Period The reporting period is one year, from January to December 2009. B. Meeting Frequency In conjunction with PT Garuda Indonesia (Persero) Corporate Governance Policy Committee Charter, the Corporate Governance Policy Committee conducts a regular meeting with GCG Implementation Working Unit of Garuda Indonesia. In addition, should it be deemed required, the Corporate Governance Policy Committee also conducts and attends other meetings with Garuda Indonesia’s internal business units as well as the Board of Commissioners and Directors. During the course of 2009, the Corporate Governance Policy Committee held 12 meetings with attendance details as follows:
Kehadiran Attendance 12 12 12 12

Throughout the year 2009, Corporate Governance Policy Committee held several activities including: 1. The Committee, along with the GCG Work Unit, met with National Committee on Governance Policy (KNKG) to discuss issues on the whistle blowing system. 2. The Committee, along with the GGG Work Unit, conducted a benchmarking with several listed companies that have implemented a whistle blowing system. 3. The Committee made a recommendation to the Board of Commissioners for the implementation of a whistle blowing system. 4. Provided direction and input in the review on Company Policy Manual with respect to current changes, including Law on Aviation, Law No. 40 Year 2007 on Limited Liability Company, and IATA Operational Safety Audit Rev. 2 Year 2009. 5. Ensured the implementation of measurement on the progress of corporate culture transformation. 6. Submitted a recommendation for Garuda Indonesia to participate in the rating survey for GCG implementation conducted by the Indonesian Institute for Corporate Governance.

Implementation of Risk Policy Committee Report A. Reporting Period The reporting period is one year, from January to December 2009. B. Meeting Frequency In conjunction with PT Garuda Indonesia (Persero) Risk Policy Committee Charter, the Risk Policy Committee conducts a regular meeting with Project Enterprise Risk Management (ERM) of Garuda Indonesia. In addition, should it be deemed required, the Risk Policy Committee also conducts and attends other meetings with Garuda Indonesia’s internal business units as well as the Board of Commissioners and Directors.

The progress achieved by Garuda Indonesia was also rightly benefited to the public as part of the Company’s corporate social responsibility. Garuda Indonesia always makes an effort to maintain balance between internal and public interest. Therefore, all decisions made by the Company will always consider the overall interest of the public and Indonesian community.

As an act of concern and social responsibility, Garuda Indonesia felt responsible to improve of social conditions and the public economy, especially of the communities surrounding Garuda Indonesia’s operational areas.

As an implementation of the above-mentioned, Garuda Indonesia has conducted a Small Business Partnership Program through the Development of Small and Medium Enterprises since 1992. Accomplishment of the

Partnership Program with Small Business by PT Garuda Indonesia (Persero) is aimed at having small and medium business become solid and independent. This program is performed by granting loans with a flat interest rate of 6% per annum to finance working capital or asset purchase in order to increase sales value and expand marketing areas.

Small businesses that became a development partner of Garuda Indonesia also enjoyed development in different aspects such as improvement in financial control, better management skills in managing the business, marketing expansion, and efforts to increase productivity & product quality. In addition, the Company also organized an Environmental Development program which develops social communities and community empowerment with donations to victims of natural disasters, provision

of education and/or training, improvement in public health, development/improvement of public facilities, improvement in religious facilities and preserving nature. Partnership and Environmental Development Program Garuda Indonesia set aside Company profit each year to support such social programs. For the Environmental Development and Partnership program, Garuda Indonesia allocated funds amounting to Rp 4,724,839,170 to support this program. The sum has increased compared to a year before which amounted to Rp 626,106,000.

1. Partnership Program Up to 2009, Garuda Indonesia’s Partnership Program has organized as many as 710 development partnership covering sectors like industry, trade, agriculture, animal husbandry, plantation, fishing, and basic commodities. The spreading of such organized partnerships covers regions within the following areas:

In 2009, the Company proudly presented one of the PKBL Garuda Indonesia development partners, Kan Wedana, a small business that focuses on making traditional fans, with the Gold Award from President of the Republic of Indonesia Mr. Susilo Bambang Yudhoyono for Indonesia Best Design 2009 in the Marketed and Mass Industrial Product Design category.

Several promotional and exhibition activities routinely attended by PKBL Garuda Indonesia by registering its development partners were: • Gelar Karya PKBL BUMN • Pekan Produk Kreatif Indonesia • Inacraft • PKBL BUMN Expo The Company set high criteria for its development partners that attend such promotional activities, from product quality to product creativity. Impacts from such activities for development partners were in fact immense as they were able to meet with buyers and potential buyers.

The collectability level of financing repayment reached 32%, higher than 13% in a year before. Garuda Indonesia continuously performs organization and development eventsso that its development partners can increase their business performance and are able to settle borrowings when the date is due.

2. Environmental Development Program The environmental organization transfer funds can be given directly to the victims of natural disaster in cash or basic goods needed in the disaster location during the time, in form of partnership with Non-Governmental Organizations (NGO) with a good reputation and through reputable distribution organization like Public Service Organization (LPM) in various universities, NGO, and others. The environmental Development Program has six categories of assistance namely: 1. Natural disaster victim assistance; to lighten the burden of natural disaster victims, Garuda Indonesia sent assistance in the form of medication, food and drinks, and other basic needs. 2. Education and/or training assistance; such assistance was provided to improve the quality of health. 3. Health enhancement assistance; health enhancement assistance was given to improve the health quality. 4. Public facilities development assistance; given to improve the physical condition of public facilities and other public infrastructure in order to improve the facilities for social welfare. 5. Religious facilities assistance; given in a form of religious house reparation, building new ones, providing support for religious activities, in order to improve the quality of public religious facilities. 6. Environmental preservation assistance; given in a form of rehabilitation activities, and others to restore natural resources.

Environmental Development Activities performed by Garuda Indonesia during year 2009 were: 1. Natural Disaster Assistance Category PT Garuda Indonesia provided assistance to victims of natural disasters in West Java and West Sumatra that occurred in 2009.

2. Education and/or Training Assistance Category As a form of responsibility to develop the local woven cloth, PKBL PT Garuda Indonesia (Persero) collaborated with Cita Tenun Indonesia (CTI) to organize training and development for textile woven cloth producers in Bali. 3. Development Assistance of Facilities for Public and Religious Category PT Garuda Indonesia provides support for those who needed improvement and development of public and religious facilities located near the Company’s office. 4. Natural Preservation Category a. Organizing Green Movement Program in Desa Sungai Balik Kelurahan Bali Gadang Kecamatan Koto Tengah Padang. b. Planting 10,000 trees in a greening movement in LAPAS Anak Wanita Tangerang. c. Working together with Gunung Kidul Government to perform a Green Movement Program in Sleman, Rejodani Ngaglik and Nanggulan Sedangagung. d. Other major programs were providing a seed provision program in Kreung Jambo Aye (Arakundo) – North Aceh, in this case cooperation was done with Yayasan Leuser Indonesia by planting 24,000 trees. e. PT Garuda Indonesia also built tortoise nurseries located in Gili Trawangan - NTB in supporting tortoise preservation in Indonesia.

Apart from that, Garuda Indonesia also started the Garuda Green Action program as part of its corporate social responsibilities of the company towards preservation of ozone layer and air quality. The activities consist of: 1. Reduce Emission: a. Garuda Indonesia was one of the 15 corporations in the world that already started such a program following the signing of an MoU on “carbon offset” with the IATA.

b. “Carbon offset” program was a ready-to-use program that was offered online to passengers as compensation to reduce emissions, contributing to carbon reduction projects in the developed countries. c. In addition, Garuda Indonesia also started the “One passenger one tree” program in the National Garden Sebangau in 2008 and will carry on until 2012. 2. Noise Reduction Garuda strives to reduce the level of noise from flight operations by significantly revitalizing its fleet with Airbus A330, Boeing 738, and Boeing 777 aircraft that comply with stage 4 requirements. 3. Energy Conservation In 28 March 2009, together with all the world’s population, Garuda Indonesia joined hands with WWF Indonesia to participate in Global Earth Hour 2009. Global Earth Hour was in line with Garuda Indonesia’s effort in reducing the negative impact of its emissions which contribute to global warming.

4. Water Conservation This program, in the midst of accomplishment, is a program to observe the management of water resources in all working areas of PT Garuda Indonesia, covering headquarters, branch offices within and outside Indonesia, SBU across Indonesia, inflight and other working areas under the management and organization of PT Garuda Indonesia. 5. Recycle Waste Garuda Indonesia is in the process of formulating corporate standards in accordance with the Indonesian National Standard (SNI) that fully adopt the ISO 14001 standards on Environmental Management Systems. These cover environmental aspects such as energy (electricity, non-aviation fuel) and waste management (solid waste).

CSR Plan 2010 In 2010, Garuda Indonesia will continue to pursue its existing programs and will focus more on efficient and effective use of natural resources.

Operating Environment The global crisis still affected the economy throughout 2009. The International Air Transport Association (IATA) reported a decline in demand for passenger and international cargo by 2.9% and 11%, respectively in 2009 which in turn affected the domestic airline industry. The number of foreign tourists to Indonesia through 11 main airports only grew by 1.43% from 6.23 million people in 2008 to 6.32 million people in 2009. Such an increase was much lower than last year’s 13.2%.

Despite that, the domestic economy still showed strong performance with economic growth recorded at 4.5% and inflation contained at 3.1%. The Rupiah tended to strengthen and closed at Rp 9,400/ US dollar at year end 2009 compared with Rp 10,900 per US dollar at year end 2008. Such favorable macro economic indicators supported a conducive business environment for domestic airline industry. Competition in the airline industry in Indonesia had, however, remained undeniably stringent, not only amongst more than 13 domestic carriers but also against foreign carriers that provide international services to and from Indonesia. Garuda Indonesia tended to see this competition as a challenge to grow the Company and deliver the best to all customers and other stakeholders.

Operating Revenue Garuda Indonesia reported a decline in operating revenue by 7.7% from Rp 19,350 billion in 2008 to Rp 17,860 billion in 2009, partly attributed to the decline in revenue from scheduled airline services by 9.4% and decline in other income by 5.3%. Meanwhile, revenue from non-scheduled airline services increased by 1% to Rp 2,491 billion in 2009.

Scheduled Airline Services As the Company’s main business earner, revenue from scheduled airline services still dominated the Company’s operating revenue, representing 76.7% of total operating revenue in 2009. This revenue fell by 9.4% in 2009 to Rp 13,699 billion, partly due to the decline in revenue from passenger of scheduled flight from Rp 14,067 billion in 2008 to Rp 12,759 billion in 2009. The decline in jet fuel prices and tightening competition particularly at international routes caused passenger yield to decline which in turn brought a decline in revenue from passengers. In total, passenger yield dropped by 19.4% in line with the decline of 25.0% in passenger yield for international flights in 2009 and 14.0% for domestic flight.

Regardless of that, revenue from passenger of scheduled airline services still dominated the revenue from scheduled airline services, accounting for 93.1% while the remaining was derived from goods, excess baggage and documents. Non-scheduled Airline Services Revenue from non-scheduled airline services which consisted of hajj and charter flights were relatively stable at Rp 2,491 billion in 2009, a 1% increase from Rp 2,467 billion in 2008. This revenue from hajj flight still dominated the revenue from non-scheduled airline services, representing 93.9% of total revenue from nonscheduled airline services.

Other Operating Revenue Other operating revenue fell by 5.3% from Rp 1,763 billion in 2008 to Rp 1,670 billion in 2009. The largest drop came from revenue derived from aircraft maintenance and overhaul to third parties which fell by 26.0% to Rp 436.7 billion. In addition, revenue from travel bureaus also declined by 23.0% to Rp 256.6 billion. Despite that, revenue from aircraft maintenance and overhaul to third parties still contributed the highest to other operating revenue, representing 26.3% in 2009.

Operating Expenses Operating expenses fell by 5.9% from Rp 17,997 billion in 2008 to Rp 16,942 billion in 2009 enabled by a decline of 18.6% in flight operation expenses to Rp 8,097 billion. Such expenses contributed 47.8% of total operating expenses. In addition, maintenance and overhaul expenses, which contributed 6.4% of total operating expenses also slightly declined by 2.9% to Rp 1.076 billion in 2009. The highest increase in operating expenses stemmed from passenger service expenses, which grew by 24.7% to Rp 1,378 billion in 2009, in line with Garuda Indonesia’s commitment to continuously improve its services to passengers.

Flight Operation Expenses Flight operation expenses were recorded at Rp 8,097 billion in 2009, a decline from Rp 9,948 billion in 2008 as a result of improvement in the Company’s efficiency and a decline in fuel expenses of 32.8% from Rp 7,415 billion in 2008 to Rp 4,984 billion in 2009. The decline in fuel expenses was in line with the decline in average cost of jet fuel from USCent 85.95/liter in 2008 to USCent 51.33/ liter in 2009. Fuel expenses was the largest contributor to flight operation expenses, accounting for 61.6% of total flight operation expenses in 2009. Meanwhile, aircraft rental and charter expenses grew by 23.6% to Rp 2,207 billion in 2009 as a result of fleet expansion during the year.

Other Operating expenses Other operating expenses consisted of maintenance and overhaul expenses, airport expenses, passenger service expenses, ticketing sales and promotion expenses, G&A expenses, depreciation & amortisation expenses, network operation expenses, hotel operation expenses and other expenses. In contrast to passenger service expenses which expanded by 24.7% due to the increase in quality of services provided by the Company as well as the increase in the number of passengers, the maintenance and overhaul expenses fell by 2.9% to Rp 1,076 billion in 2009. However, airport services grew by 8.6% while ticket, sales & promotion expenses increased by 4.7%, respectively. Operating Profit As a result of the decline in operating revenue, operating profit declined by 32.2% to Rp 918 billion in 2009. Consequently, operating margin dropped from 7.0% in 2008 to 5.1% in 2009.

Other Operating Income (Expenses) The Company posted a decline in other expenses from Rp 333 billion in 2008 to Rp 55 billion in 2009. Such decline was particularly supported by gain from foreign exchange of Rp 462 billion in 2009 compared with foreign exchange losses of Rp 413 billion in 2008 following the strengthening of Rupiah against the US dollar. Furthermore, the Company also posted a decline in financial and interest expenses from Rp 378 billion in 2008 to Rp 262 billion in 2009 in line with the successful debt restructuring and lower debt exposure.

On the other hand, however, the Company actually incurred higher other expenses related to the allowance for uncollectible receivables and pension benefits. Allowance for uncollectible receivables was Rp 157 billion while pension benefits reached Rp 203 billion in 2009. This employee pension benefit was particularly related to the second career program offered to selected employees during the year.

Profit Before Tax As a result of the decline in other expenses and increase in net profit from associated companies from Rp 9 billion in 2008 to Rp 13 billion in 2009, profit before tax only fell by 14.9% to Rp 876 billion in 2009.

Net Profit The success of the Company in conducting debt restructuring and settling its Bank Mandiri’s convertible bond enabled it to record a gain from the settlement amounting to Rp 123.5 billion, which was recorded as an extraordinary gain. This led to an increase in net profit by 4.5% to Rp 1,019 billion in 2009. Consequently, net profit margin expanded from 5.0% in 2008 to 5.7% in 2009.

Financial Position Assets Total Company’s assets were Rp 14,802 billion in 2009, declining by 3.3% in line with the decline of 8.9% in current assets and 0.8% in non-current assets.

Current Assets Current assets dropped by 8.9% to Rp 4,212 billion in 2009. Such decline was particularly due to the decline in cash by 33.8% to Rp 1,722 billion in 2009 in line with the settlement of debt and the payment of security deposits for new aircraft which will be delivered in 2010. Meanwhile, receivables increased by 28.2% to Rp 1,067 billion in 2009, partly attributed to the increase in receivables related to hajj services. As a result, receivables turnover expanded from 15 days in 2008 to 21 days in 2009.

Non Current Assets Non current assets fell by 0.8% to Rp 10,590 billion in 2009. Such decline was particularly due to a decline in other receivables related to aircraft maintenance services provided to third parties. Total Company receivables related to this was US$ 33 million and Rp 999 million. However, as the company allocated allowance for doubtful receivables amounted to Rp 157 billion at end December 2009, other receivables (net) reached Rp 161 billion at the end of 2009, a decline from Rp 385 billion at the end of 2008. Meanwhile, funds for aircraft maintenance and guarantee deposits increased from Rp 1,191 billion in 2008 to Rp 1,642 billion in 2009 in line with fleet expansion carried out during the year.

Liabilities Current liabilities posted a decline of 10.4% to Rp 6,348 billion in 2009, partly due to a substantial decline in trade payables from Rp 2,069 billion in 2008 to Rp 1,267 billion in 2009.

Meanwhile, non current liabilities dropped by 23.1% to Rp 5,234 billion in 2009 particularly due to a decline of 14.1% in long term debt to Rp 3,638 billion in 2009 and successful settlement of the Company’s convertible bonds (from Rp1,019 billion in 2008 to none in 2009).

Shareholders Equity Equity posted a significant increase from Rp 1,366 billion in 2008 to Rp 3,214 billion in 2009 in line with the net profit recorded during the year. Meanwhile, paid up capital also increased by Rp968 billion in 2009, coming from the conversion of Bank Mandiri’s Convertible Bonds into equity.

1. Operational Activities The main source of the Company’s liquidity is funds obtained from operational activities. Cash obtained from operational activities fell from Rp 1,770 billion in 2008 to Rp 1,380 billion in 2009 in line with the decline in operating revenue. In addition, this decline was also due to higher receivable turnover from only 15 days in 2008 to 21 days in 2009.

2. Investment Activities In line with the Company’s expansion, cash utilized for investment activities reached Rp1,600 billion in 2009. Such high investment funding was allocated to pay the down payment for aircraft purchases, aircraft maintenance and fixed assets acquisition. Meanwhile, the Company also received returnable funds from the previous down payment of aircraft purchases and returnable funds from aircraft maintenance.

3. Financing Activities During 2009, the Company paid long term debt amounting to Rp 851 billion. On the other hand, the Company obtained short term funding amounting to Rp 209 billion. Total net cash disbursed to support funding activities was Rp 602 billion in 2009.

Other Financial Aspects Debt Restructuring The company continued its debt restructuring in 2009. Below is the debt restructuring carried out throughout the year 2009. 1. Pertamina Based on agreement dated October 19, 2009, Pertamina agreed to convert the Company’s trade payable for fuel purchase transactions amounting to US$ 76.5 million, equivalent to Rp 712 billion into a long term loan. 2. Angkasa Pura II Based on agreement dated May 27, 2009, PT Angkasa Pura II (Persero) agreed to convert the Company’s trade payable amounting to US$21 million, equivalent to Rp 196 billion, into a long term loan.

3. Angkasa Pura I Based on agreement dated May 27, 2009, PT Angkasa Pura I agreed to convert the Company’s trade payable amounting to USD8.9 million or equivalent to Rp 91 billion, into a long term loan.

4. Convertible Bonds On December 2009, Bank Mandiri and the Company agreed to restructure and settle the Mandatory Convertible Bonds as follows: (1) Cash payment of 5% of the principal, equivalent to Rp 51 billion, and (2) The remaining 95% of the principal of Rp 968 billion is converted into Company shares. The Company booked gain from the settlement amounting to Rp 124 billion.

Investment Policy In expanding its fleet, Garuda Indonesia adopted “Sale and Lease Back” policy in 2009, whereby financing for the aircraft purchases was obtained from Dubai Aerospace Enterprise and Mitsubishi Corporation. Consequently, this new fleet would not be recorded as assets and Garuda Indonesia recognized leasing expenses related to this transaction accordingly. On the other hand, the Company disbursed funds for aircraft maintenance amounting to Rp 630 billion and Rp 301 billion for refurbishment of Airbus 330-300, which were undeniably important investments to support the Company’s performance.

Meanwhile, in the area of Information Technology, the Company adopted a leasing policy, hence, it did not spend substantial investment costs related to this transaction. Investment in Information Technology was mostly incurred at its subsidiary, PT Aero Systems Indonesia.

Dividend Policy It is the Company’s policy to distribute dividends at least once a year, unless decided otherwise by the AGM. However, considering the financial position of the Company, which still had accumulated losses of Rp 7,439 billion per December 2009, the Company has not distributed dividends for the last 6 years. Subsequent Information and Events After the publication of the Company’s audited financial statements, the following matters should be disclosed: 1. On January 21, 2010, the Company repurchased its FRN amounting to US$ 40 million and Rp 37 billion at US$ 22 million and Rp 23 billion, respectively. Based on the Deed of Amendment and Restatement dated January 21, 2010, unpaid FRN was US$ 75 million and Rp 108 billion, which had been restructured and will be due in 2018. 2. On February, March and April 2010, four Boeing 737-800 engaged in the sale and lease back agreement were delivered. The agreed selling price was US$178 million and will be leased for 12 years.

3. On April 8, 2010, the Company received notification of initial investigation No. 460/KPPU-TP-PP/2010 from National Commission on Anti Monopoly (KPPU) related to allegation of business preferential practices concerning the extension of give away hajj for the year 2009/2010 and 2010/2011. However until the publication of this financial statement, such case was still in the investigation stage at KPPU.

Material Information All material information related to investment, debt restructuring or conflict of interest transactions and the nature of any transactions with affiliated parties have been disclosed in the audited financial statements in this Annual Report. Impact of Changes in Government Regulations There were no changes in the laws and regulations that have had a significant impact on the Company or directly impacted its financial statements. Changes in Accounting Policy In 2009, the Company made some adjustments to the 2008 financial statements to conform with the accounting principles generally accepted in Indonesia and accounting practices for the airline industry which referred to AICPA Airline Industry Guide. Such adjustments covers the following:

- Overhaul Engine and Airframe Expenses Based on previous accounting standard, in accordance with AICPA recommendation Industry Audit Guide, Audit of Airlines, overhaul expenses is recognized using accrual method. Under this method, overhaul expenses is recognized based on utilized flying hours. Meanwhile, based on the new accounting standard, Industry Audit Guide issued a revision which disallowed the use of accrual method for it does not conform with the liabilities recognition principle. Under the new method, overhaul expenses is capitalized when occurred as such expenses have economic value in the future and the amount can be measured precisely and amortized during the usable life until the next overhaul period.

- Operating Lease with Return Condition Requirement The majority of operating lease agreements (aircraft) of Garuda Indonesia requires minimum performance of the aircraft when the aircraft is returned at the end of the leasing period: Minimum available hours for the engine; Fresh from C-check for the Airframe; and a One-off return cost (cabin and repainting, the same condition as when the aircraft arrived). With this requirement, Garuda Indonesia has a contractual obligation which has to be recognized as a liability (PSAK 57) when the aircraft no longer fulfills the minimum performance required under the agreement, which amounted to minimum cost for such “return condition”. Early recognition of this liabilities caused an asset recognition which lead to a benefit in the future (paragraph 7 PSAK 16) which is obtained through the operation of the aircraft and is depreciated until the next period of heavy maintenance. In 2008 and before, Garuda has not recognized liabilities for such return condition.

- Maintenance Reserve or Supplemental Rent The leasing agreement requires Garuda Indonesia to pay supplemental rent to lessor to anticipate “heavy maintenance” in the future. Garuda Indonesia may claim maintenance expenses when heavy maintenance occurred through a reimbursement mechanism. Under this regulation, the payment of supplemental rent has to be recognized as an assets (deposits or prepayment) as it will be recovered from lessor and is not recognized as a rental expense. PSAK 30 (revised 2007), paragraph 30 stated that the rental payment does not include service fees like insurance and maintenance fees. In 2008 and before, Garuda Indonesia recorded supplemental rent under rental expenses.

- Customer Loyalty Program Garuda Indonesia has not recognized estimated liabilities for the Garuda Frequent Flyer in program accordance with PSAK 59 and ISAK 10 for its 2008 financial year and before. - Employee Benefit – Pension Plan In financial statement year 2008 and before, Garuda Indonesia did not recognize the liabilities estimation on MPP program in accordance to PSAK 24 (revised 2004).

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED

1.

GENERAL a. Establishment and General Information PT Garuda Indonesia (Persero) (“the Company”) was established based on Notarial Deed No. 137 dated March 31, 1950 of Raden Kadiman. The deed was approved by the Minister of Law of the Republic of Indonesia in his Decision Letter No. J.A.5/12/10 dated March 31, 1950 and published in the State Gazette of the Republic of Indonesia No. 30 dated May 12, 1950, Supplement No. 136. The Company was previously a State Company, based on Deed No. 8 dated March 4, 1975 of Notary Soeleman Ardjasasmita, S.H., and has changed into a state-owned limited liability company as a result of Government Regulation No. 67 in 1971. This change was published in the State Gazette of the Republic of Indonesia No. 68 dated August 26, 1975. The Company's Articles of Association have been amended several times, most recently by Deed No. 274 dated December 30, 2009 of Aulia Taufani, S.H., substitute notary of Sutjipto, S.H., notary in Jakarta, concerning the changes in the shareholders’ composition. This amendment has been received and recorded in Sisminbakum Database of General Law Administration Directorate of Law and Human Rights of the Republic of Indonesia in its letter No. AHU-0087362.AH.01.09.Tahun 2009 dated December 31, 2009. The objectives of the Company's establishment, in general is to carry out and support the Government's program in economic and national development, especially in air transportation and other related areas.

The Company’s head office is located at Jl. Kebon Sirih No. 44, Jakarta. In accordance with article 3 of the Company's Articles of Association, the scope of its activities comprises of the following: 1. Scheduled air transport, both domestic and international, of commercial passengers, cargo and mail. Non-scheduled air transport, both domestic and international, of passengers, cargo and mail.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

3.

Maintenance and overhaul of its own and other airlines' aircrafts. Support services related to air transport operations. Information systems services related to air transport operations. Consultation, education and services related to air transport. training

4. 5. 6.

4. 5. 6.

7.

7.

Health care services for the Company's employees and other third parties.

The Company had an average of 5,075 and 5,548 employees during 2009 and 2008. At December 31, 2009 and December 31, 2008, the Company's management consists of the following: President Commissioner Commissioner Commissioner Commissioner Commissioner President & CEO EVP Finance EVP Engineering & Maintenance EVP Commercial EVP Human Capital & Corporate Support EVP Operation EVP Corporate Strategy & Information Technology Total remuneration of the Company’s commissioners and directors amounted to Rp 28,047,786,625 in 2009 and Rp 10,933,380,000 in 2008, respectively.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

On May 13, 2004, the Company entered into a Joint Venture Agreement with Lufthansa Systems Group GmbH (Lufthansa) to establish a joint venture company namely PT Lufthansa Systems Indonesia (LSI). LSI engages in providing consultancy services, Information Technology (IT) and IT system maintenance, to airline companies and other industries. The Company has 51% ownership in LSI while Lufthansa has 49%, with initial capital investment of Rp 22,500,254,025 and Rp 21,617,883,675, respectively. Based on the Amendment No. 3 to the Joint Venture Agreement No. DS/AMEND.3/PERJ/DZ-3064/2005 dated April 30, 2005 of Article 9, in no later than June 30, 2007, Lufthansa’s ownership will be increased to 51% while the Company will have 49% ownership interest. In 2007, the Company proposed an arbitration appeal to the Singapore International Arbitration Committee, wherein the Company demands, among other things, the termination of joint venture agreement between the Company and Lufthansa. Due to the transfer of shares of Lufthansa to PT Aerowisata, whereby the Company’s percentage of ownership in LSI directly and indirectly becoming 100%, the arbitration process is therefore cancelled. The cancellation was stipulated in the Settlement Agreement between Lufthansa and the Company dated December 10, 2008. Based on notarial deed No. 131 dated January 29, 2009 of Sutjipto, S.H., notary in Jakarta, Lufthansa’s shares in LSI of 2,276,765 share or equal to 49%, have been transferred to PT Aerowisata, at a price of USD 5,200,000. Due to these changes, the name of PT Lufthansa System Indonesia is changed into PT Aero Systems Indonesia. On January 6, 2009, the Company with PT Aerowisata, a subsidiary, established PT Citilink Indonesia, which will be engaged in scheduled air transport. The share ownership of each of the Company and PT Aerowisata is 67% and 33%. As of the date of the consolidated financial statements, PT Citilink Indonesia has not yet started commercial operations.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

2.

ADOPTION OF REVISED STATEMENTS AND INTERPRETATIONS OF FINANCIAL ACCOUNTING STANDARDS (PSAK AND ISAK) a. Revised standards effective in the current period In 2009, the Company adopted the revised accounting standard for inventories, which supersedes PSAK 14, Inventories. The principal changes to the standard include among other things the requirement to use the same cost formula for all inventories having similar nature and use to the entity, and for purchase of inventories with deferred settlement terms, the difference between the purchase price for normal credit terms and the amount paid is recognized over the period of financing.

The initial adoption has no significant effect on the consolidated financial statements but may affect the accounting for future transactions or arrangements. b. Revised standards in issue not yet adopted in the current period i. Standards effective for financial statements beginning on or after January 1, 2010:    PSAK 26 (revised 2008), Borrowing Costs PSAK 50 (revised 2006), Financial Instruments: Presentation and Disclosures PSAK 55 (revised 2006), Finance Instrument: Recognition and Measurement.

Management is evaluating the effect of these standards and interpretations on the consolidated financial statements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Consolidated Financial Statements Presentation The consolidated financial statements have been prepared using accounting principles and reporting practices generally accepted in Indonesia, and are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and reporting practices generally accepted in other countries and jurisdictions.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

The consolidated financial statements, except for the consolidated statements of cash flows, are prepared under the accrual basis of accounting. The reporting currency used in the preparation of the consolidated financial statements is the Indonesian Rupiah, while the measurement basis is the historical cost, except for certain accounts which are measured on the bases described in the related accounting policies. The consolidated statements of cash flows are prepared using the direct method with classification of cash flows into operating, investing and financing activities. b. Principles of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of the investee entity so as to obtain benefits from its activities. Control is presumed to exist when the Company owns directly or indirectly through subsidiaries, more than 50% of the voting rights.

The minority interest consists of the amount of those interests at the date of original business combination (Note 3c) and minority's share of movements in equity since the date of the business combination. Any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of the subsidiaries to bring the accounting policies used in line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

c.

Business Combinations Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is the aggregate of the fair value (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued in exchange for control of the acquiree, plus any costs directly attributable to the business combination. On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill and amortized using the straight-line method over five years. When the cost of acquisition is less than the interest in the fair values of the identifiable assets and liabilities acquired as at the date of acquisition, the fair values of the acquired non-monetary assets are reduced proportionately until all the excess is eliminated. The excess remaining after reducing the fair values of non-monetary assets acquired is recognized as negative goodwill, treated as deferred revenue and recognized as revenue on a straight-line method over 20 years.

The interest of the minority shareholders is stated at the minority’s proportion of the historical cost of the net assets. d. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

e.

Foreign Currency Transactions and Translation The books of accounts of the Company and its subsidiaries, except Garuda Orient Holidays Pty. Ltd (GOH) located in Korea and Australia, are maintained in Indonesian Rupiah. Transactions during the year involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made. At balance sheet date, monetary assets and liabilities denominated in foreign currency are adjusted to reflect the rates of exchange prevailing at that date. The resulting gains or losses are credited or charged to current operations. The books of accounts of GOH are maintained in Australian Dollars and Korean Won. For consolidation purposes, assets and liabilities of GOH at balance sheet date are translated into Rupiah using the exchange rates at balance sheet date, while revenues and expenses are translated using the average rates of exchange for the year. Resulting translation adjustments are shown as part of equity as “Translation Adjustments”.

Transactions with Related Parties Related parties consist of the following: 1) Companies that directly, or indirectly through one or more intermediaries, control, or are under common control with, the Company (including holding companies, and fellow subsidiaries);

associated companies; individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members of the family of any such individuals (close members of the family are those who can influence or can be influenced by such individuals in their transactions with the Company);

4)

4)

key management personnel who have the authority and responsibility for planning, directing and controlling the Company’s activities, including commissioners, directors and managers of the Company and close members of their families; and

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

5)

companies in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (3) or (4) or over which such a person is able to exercise significant influence. This includes companies owned by commissioners, directors or major stockholders of the Company and companies which have a common key member of management as the Company.

All transactions with related parties, whether or not made at similar terms and conditions as those done with third parties, are disclosed in the consolidated financial statements.

The Company and its subsidiaries do not need to disclose transactions with Stateowned/Regional-owned enterprises as transactions with related parties, in accordance with Statement of Financial Accounting Standards (SFAS) No. 7 “Related Party Disclosure”. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and in banks and all unrestricted investments with maturities of three months or less from the date of placement. Cash and cash equivalents which are restricted and used as collateral are recorded and presented separately as restricted assets. Investments Time deposits Time deposits with maturities of three months or less which are pledged as loan collateral and time deposits with maturities of more than three months that are realizable within one year from balance sheet date are presented as short-term investments and are stated at their nominal values. Investments in associates An associate is an entity over which the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Company share of the net assets of the associate, less any impairment in the value of the individual investments. Losses of the associates in excess of the Company interest in those associates are not recognized except if the Company has incurred obligations or made payments on behalf of the associates to satisfy obligations of the associates that the Company has guaranteed, in which case, additional losses are recognized to the extent of such obligations or payments.

Goodwill and negative goodwill from investments in associates are included in the carrying amount of the investment and are measured and amortized in the same manner as that for acquisition of controlled entities (Note 3c). The amortization of goodwill and negative goodwill are included in the Company’s share in the results of the associates. Other investments Investments in shares of stock with ownership interest of less than 20% that do not have readily determinable fair values and are intended for long-term investments are stated at cost. The carrying amount of the investments is written down to recognize a permanent decline in the value of the individual investments. Any such write-down is charged directly to current operations. i. Change of equity in subsidiaries and associates Changes in the value of investments due to changes in the equity of subsidiaries or associates arising from capital transactions of such subsidiaries or associates with other parties are recognized in equity as Difference Due to Change of Equity in Subsidiaries or Associates, and recognized as income or expenses in the period the investments are disposed of.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

j.

Allowance for Doubtful Accounts Allowance for doubtful accounts is provided based on a review of the status of the individual receivable accounts at the end of the year.

k.

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business less applicable selling expenses.

l.

Prepaid Expenses Prepaid expenses are amortized over their beneficial periods using the straight-line method.

m. Investment Properties Investment properties are properties (land or a building – or part of a building – or both) held to earn rentals or for capital appreciation or both. Investment properties are recorded initially at cost. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in fair value are recognized in income statement in the period in which they arise. n. Property, Plant and Equipment Starting December 31, 2008, aircraft, land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations is made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair at the balance sheet date.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Any revaluation increase arising on the revaluation of such aircraft, land and buildings is credited to the revaluation surplus in the equity section, except to the extent that it reverses a revaluation decrease, for the same asset which was previously recognized in profit or loss, in which case the increase is credited to profit and loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such aircraft, land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the revaluation surplus relating to a previous revaluation of such aircraft, land and buildings. The revaluation surplus included in equity in respect of aircrafts, land and buildings is directly transferred to retained earnings when the asset is derecognized. Previously, aircrafts, land and buildings and improvements are stated at cost, less accumulated depreciation and any accumulated impairment losses. The change in the accounting policy for subsequent measurement of aircrafts, land and buildings from cost model to revaluation model is accounted for prospectively. Aircraft assets are depreciated using the straight-line method to an estimated residual value based on their estimated useful lives, as follows:

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Assets held under finance lease are depreciated based on the same estimated useful life with owned assets or over the lease period which ever is shorter.

The estimated useful lives, residual values and depreciation method are reviewed at least each year end and the effect of any changes in estimate is accounted for on a prospective basis. The cost of maintenance and repairs is charged to operations as incurred. Other costs incurred subsequently to add to, replace part of, or service an item of property and equipment, are recognized as asset if, and only if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. When assets are retired or otherwise disposed of, their carrying amount is removed from the accounts and any resulting gain or loss is reflected in the current operations.

Construction in progress is stated at cost which includes borrowing costs during construction on debts incurred to finance the construction. Construction in progress is transferred to the respective property and equipment account when completed and ready for use.

For borrowings that are not specific to the acquisition of a qualifying asset, the amount capitalized is determined by applying a capitalization rate to the amount expended on the qualifying asset. The capitalization rate is the weighted average of the borrowing costs applicable to the total borrowings outstanding during the period, excluding borrowings directly attributable to financing other qualifying assets. Properties under BOT are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over 20 - 30 years.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

o.

Impairment of an Asset When the carrying amount of an asset exceeds its estimated recoverable amount, the asset is written down to its estimated recoverable amount, which is determined as the higher of net selling price and value in use.

p.

Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases, which do not meet this criteria, are classified as operating leases. The Group as a lessee Assets held under finance leases are initially recognized as assets of the Company and subsidiaries at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss. Contingent rentals are recognized as expenses in the periods in which they are incurred. Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate amount of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Sale and leaseback Assets sold under a sale and leaseback transaction are accounted for as follows: If the sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount of the asset is deferred and amortized over the lease term. If the sale and leaseback transaction results in an operating lease, and the transaction is established at fair value, any profit or loss is recognized immediately. If the sale price is below fair value, any profit or loss is recognized immediately except that, if the loss is compensated by future lease payments at below market price, it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is deferred and amortized over the period for which the asset is expected to be used.

For operating leases, if the fair value at the time of a sale and leaseback transaction is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and fair value is recognized immediately. For finance leases, no such adjustment is necessary unless there has been an impairment in value, in which case the carrying amount is reduced to recoverable amount. Heavy Maintenance Costs of Aircraft Major airframe inspection cost relating to heavy maintenance visit and engine overhauls for owned aircraft and those held on finance lease is capitalized and amortized over the period until the next expected major inspection or overhaul.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

If there is a commitment related to maintenance of aircraft held under operating lease arrangements, a provision is made during the lease term for the lease return obligations specified within those lease agreements. The provision is made based on historical experience, manufacturers’ advice and if relevant, contractual obligations, to determine the present value of the estimated future of major airframe inspections cost and engine overhauls, by making appropriate actual charges to the statements of operations, calculated by reference to period following major overhaul or inspections. All other repair and maintenance costs are expensed as incurred. r. Deferred charges Other charges that meet the asset recognition criteria are deferred and amortized using the straight-line method over their beneficial periods. s. Revenue and Expense Recognition Passenger ticket and cargo waybill sales are initially recorded as unearned transportation revenue. Revenue is recognized when transportation service is rendered. Revenue also includes recoveries from surcharges during the year. Revenue from short-term aircraft maintenance and overhaul contract is recognized when the service is rendered. Revenue from long-term aircraft maintenance and overhaul contracts is recognized using the percentage-of-completion method.

Revenues from hotels, catering, travel agency services, reservation system services and other services related to flight operations are recognized when the services are rendered. Rental revenue is recognized in accordance with Note 3p. Interest revenue is accrued on time basis, by reference to the principal outstanding and at the applicable interest rate.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Dividend income from investment in shares of stock is recognized when the shareholders’ rights to receive such dividend have been established. Expenses are recognized when incurred. t. Frequent Flyer Program The Company operates a frequent flyer program called “Garuda Frequent Flyer” that provides travel awards to program members based on accumulated mileage. A portion of passenger revenue attributable to the award of frequent flyer benefits, estimated based on expected utilization of these benefits, is deferred until they are utilized. These deferment of the revenue is recorded as unearned revenue on the balance sheet. Any remaining unutilized benefits are recognized as revenue upon expiry. u. Post-Employment Benefits Benefits and Long-Term

Post-employment benefits Post-employment benefits are determined using the Projected Unit Credit Method. The accumulated unrecognized actuarial gains and losses that exceed 10% of the greater of the present value of the defined benefit obligations and the fair value of plan assets, is recognized on straight-line basis over the expected average remaining service years of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The employee benefits obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and reduced by the fair value of plan assets. Long-term Benefits Long-term benefits are determined using the Projected Unit Credit Method. Past service cost and actuarial gains (losses) are recognized immediately in the current operations.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

The long-term employee benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation. v. Troubled Debt Restructuring The excess of the carrying amount of the loan and related accounts over the total future cash payments specified by the new terms of the loan in a troubled debt restructuring involving only modification of terms is recognized immediately as restructuring gain. After the restructuring, total future cash payments under the terms of the loan are deducted from the carrying amount of the loan, and no interest expense is recognized on such loan until maturity. If the carrying amount of the loan is less than the total future cash payments specified by the new terms of the loan in a troubled debt restructuring involving only modification of terms, no gain or loss is recognized. The effect of such restructuring is accounted for prospectively from the time of restructuring. After the restructuring, interest expense is computed by applying a constant effective interest rate to the carrying amount of the loan and related accounts at the beginning of each period until maturity.

w.

Provision Provisions are recognized when the Company and its subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that the Company and its subsidiaries will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. x. Income Tax Current tax expense is determined based on the taxable income for the year computed using the prevailing tax rates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable income will be available in future periods against which the deductible temporary differences can be utilized. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the statement of income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also charged or credited directly to equity. Deferred tax assets and liabilities except deferred tax asset and liability for different entity, are offset in the balance sheet in the same manner the current tax assets and liabilities are presented. y. Derivative Financial Instruments Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are subsequently measured to their fair value at each balance sheet date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Changes in fair value of derivative financial instruments that are designated as effective hedges of future cash flows are recognized as part of equity and the ineffective portion is recognized immediately in earnings. If the hedged transaction results in the recognition of an asset or liability, the accumulated gains and losses under equity are reclassified into earnings in the same period in which the related asset or liability affects earnings. For hedges that do not result in the recognition of an asset or liability, amounts deferred in equity are recognized in earnings in the same period in which the hedged item affects net income or loss.

For an effective hedge of an exposure to changes in the fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged and such changes are recognized immediately in earnings. Gains or losses from re-measuring the derivative, or the foreign currency component of the carrying amount of non-derivatives, are recognized immediately in earnings. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the statement of income as they arise. z. Segment Information Segment information is prepared using the accounting policies adopted for preparing and presenting the consolidated financial statements. The primary format in reporting segment is based on business segments, while the secondary segment information is based on geographical segments. A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

A geographical segment is a distinguishable component of an enterprise that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those components operating in other economic environment. Assets and liabilities that relate jointly to two or more segments are allocated to their respective segments, if and only if, their related revenues and expenses are also allocated to those segments.

The management believes that the allowance for doubtful accounts is adequate to cover possible losses on uncollectible accounts. Management also believes that there are no significant concentrations of credit risk in third party receivables.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

At December 31, 2009 and 2008, the inventories were insured with some insurance companies against fire and other risks under pool policies with total sum insured of USD 150,000,000 and USD 200,000,000, respectively. Management believes that the insurance coverage is adequate to cover possible losses arising from possible losses on the inventories insured.

The Company Estimated Overpayment of Corporate Income Tax Year 2009 Year 2008 Year 2007 Sub Total Subsidiaries Estimated Overpayment of Corporate Income Tax Year 2009 Year 2008 Value Added Tax Sub total Total

12. ADVANCES FOR PURCHASE OF AIRCRAFT This account represents advances for purchase of 3 (three) Airbus type A-330, 10 Boeing 777-300ER with delivery schedule starting July 2010 up to July 2013, and 25 Boeing 737-800 with delivery schedule starting June 2009 up to May 2012 (Note 47a).

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Changes in investments in associates:
2008 Rp 103.436.370.452 8.691.291.411 (1.972.288.745) (141.750.000) 110.013.623.118 6.041.704.058 990.266.870 (302.439.502) 6.729.531.426 2.196.473.125 (281.853.242) 1.914.619.883 PT Gapura Angkasa Balance at beginning of year Equity in net income Dividends Tantiem Balance at end of year PT Aeroprima Balance at beginning of year Equity in net income Dividends Balance at end of year PT Aeronurti Catering Services Balance at beginning of year Equity in net loss Balance at end of year

As of December 31, 2009, PT Aerowisata, subsidiary, has investment in shares of PT Belitung Inti Permai which has been fully impaired. The subsidiary's management believes that this investment will not be recovered as the development of Belitung Beach Hotel had been stopped since 1994. The initial cost of the investment amounted to Rp 2,059,740,000.

In 2009, management revised the estimated useful lives of certain buildings and improvements from 10 years to 40 years to better reflect the expected pattern of consumption of the future economic benefits embodied in those assets. The change in the estimated useful lives is accounted for prospectively. The change of the useful lives of these assets has decreased the current year depreciation expense by Rp 659,862,602,402. In 2009 and 2008, the Company and its subsidiaries revalued its aircrafts, land and buildings. The revaluation is conducted by independent appraisal using market value approach for land and aircraft and replacement cost method for building. Construction in progress represents building under construction and machine under installation for the expansion of the Company and its subsidiaries, which are estimated to be completed in 2010. Property and equipment of the Company and subsidiaries are used as collateral for long-term loans (Note 24). At December 31, 2009 and 2008, property and equipment, except land, were insured with some insurance companies against fire, theft and other possible risks for USD 776,878,882 and Rp 1,68,052,471,777 in 2009 and USD 1,640,108,255 and Rp 1,172,894,098,543 in 2008, respectively. Management believes that the insurance coverage is adequate to cover possible losses on the assets insured.

The Company and its subsidiaries have investment properties in land and building located in Jakarta and Bali. The Company and its subsidiaries use fair value model in measuring the investment property subsequent to initial recognition. Valuation of the investment properties was conducted by independent appraisers. On December 28, 2009, the subsidiary sold certain Investment properties and recognized gain as follows:

Other receivables This account represents receivable from PT Merpati Nusantara Airlines (MNA) which arose from the maintenance of aircrafts. Based on the agreement dated March 10, 1999, MNA agreed to settle its payables within 8 years with interest rate of 7% per annum for receivable denominated in USD and 15% per annum for receivable denominated in Rupiah. In 2003, the Company’s management and MNA have agreed to convert the accounts receivable into Mandatory Convertible Bonds (MCB) amounting to USD 30,502,683 and Rp 999,003,673, while the remaining balance of USD 2,770,572 will be settled separately. The Minister of State-Owned Enterprise had agreed the issuance of MCB with a term of 5years at interest rate of 3% per annum and yield to maturity of 18%. However, MNA did not agree with several clauses that the Company added in the agreement. In 2004, MNA has cancelled the MCB process and proposed the conversion into shares. This proposal was confirmed by Minister of State-Owned Enterprise in his letter No. S-89/MBU/2005 dated February 25, 2005. In response to the letter, the Company had sent a letter to the Minister of StateOwned Enterprise No. DF-2108/05 dated April 15, 2005 which stated that the Company is still conducting the restructuring program until year 2010 and during the restructuring program, the Company should comply with the covenants determined by each creditor in accordance with the commitment stated in the loan restructuring agreement, including the Company’s investment decision.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

In March 2009, the Company and MNA have signed a Memorandum of Understanding where both parties agreed that MNA will settle its liabilities to the Company of USD 33,273,256 and Rp 99,003,673 in 13 (thirteen) years since the signing of Debt Restructuring Agreement. As of the issuance date of the consolidated financial statements, this debt restructuring agreement has not been settled. On December 31, 2009, the Company has made allowance for doubtful accounts amounting to Rp 156,883,803,768.

Non productive assets Non productive assets as of December 31, 2009 and 2008 consist of Flight Simulator MD-11 with book value of Rp 108,597,176,218, Garuda Indonesia Training Center (GITC) building with book value of Rp 21,144,836,872, furniture with book value Rp 1,004,429,848 and rotables with book value of Rp 28,463,606,976 that are no longer used in the Company’s operations. Based on management’s estimates, those amounts have been impaired for respective assets, with details as follows:
2008 Rp 159.210.049.914 (109.281.514.556) 49.928.535.358 Book value - before impairment Accumulated impairment loss Net The movement of accumulated impairment loss is follows: (109.281.514.556) (320.091.510) (109.601.606.066) (73.358.870.257) (35.922.644.299) (109.281.514.556) Balance at beginning of year Net change for the year Balance at end of year

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Based on Side Letter dated September 29, 2006, GMFAA and Aero Inventory Limited (AI) entered into the aircraft parts purchase and exchange agreement for the value of USD 23 million at certain list price. Within 15 months starting from the date of side letter, those parts can be exchanged with AI’s parts based on GMFAA’s qualifications. If it is not possible to do this completely from AI’s parts, starting from the sixteenth month until the twenty fourth month, AI undertakes to supply parts from outside sources suitable for the GMFAA’s requirements and with the same aggregate list price value as stipulated in the agreement.

In the event the parts stated in the side letter is found to be missing or in unserviceable condition when it is required for use, AI will replace the parts missing or unserviceable. AI is also responsible to obtain the accurate list price of the parts involved and submits those prices to GMFAA for approval. On January 17, 2008, GMFAA and AI signed the formal agreement (the Materials Management Services Agreement) on the side letter. In 2009, all transactions have been settled.

Bank Negara Indonesia On July 28, 2009, GMFAA, a subsidiary, obtained an open account financing facility of USD 10 million from Bank Negara Indonesia (BNI) with interest rate at 6% per annum and term of 90 days. On October 16, 2009, this financing facility was increased to USD 15 million and requires GMFAA to maintain a minimum balance of time deposits and/or credit bank account of USD 5 million in BNI.

In December 2009, PT Angkasa Citra Sarana Catering Service (ACS), a subsidiary, obtained a working capital loan with maximum amount of Rp 100 billion. The loan will be used for working capital financing with interest rate per annum of 11%.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Bank CIMB Niaga PT Mandira Erajasa Wahana (MEW), a subsidiary, obtained a loan facility to be used as bridging financing for liquidity gap arising from investment activities. This loan has a maximum term of one year or the period of leased agreement whichever is shorter, with interest rate per annum at 1.25% plus the interest rate of time deposits guaranteed by the government. This loan is secured by time deposit (Note 5). 19. TRADE ACCOUNTS PAYABLE a. By Creditor:
2008 Rp 68.931.330.601 Related parties (Note 44) Third parties Airline services Fuel User charges and station General and administrative Maintenance and overhaul Airline Catering Aircrafts leasing Airlines and crew insurances Others Sub total Non airlines services Total Total

Restructured Loans In 2001, the Company has obtained an effective notification from the creditors regarding the Company's debt restructuring. The Company's debt restructuring consisted of: a. Converting the Company's loans owed to the Government of the Republic of Indonesia into paid-up capital stock . Refinancing of the Company's loans owed to state-owned banks and state-owned enterprise and converting portion of the loans into mandatory convertible bonds denominated in Rupiah (Note 29). Rescheduling of loans owed to other creditors which include unsecured promissory notes, unsecured syndicated term loan facilities, working capital facilities and payables for the breach of aircraft operating lease agreements. Rescheduling of the lease payments for 6 Airbus A-330 aircrafts due to the creditors who joined the European Export Credit Agencies (ECAs) (Note 25). the the the the the

The Company is required to comply with covenants as provided in the agreement with creditors. The Company also agreed to settle above-mentioned loans to the creditors using excess cash of the Company as stipulated in Cash Sweep Deed of Covenant.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Floating Rate Note The Company issued Floating Rate Notes payable (FRN) in US Dollar and Rupiah. The Chase Manhattan Bank - London Branch acted as Trustee in the issuance of the FRN. The FRN will mature in 2007 and bears floating interest based on quarterly LIBOR + 0.5% per annum for the FRN in US Dollar and average interest rate for 3-month deposits + 1.5% of Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank Mandiri for the FRN in Rupiah. Pertamina Based on agreement dated October 19, 2009 PT Pertamina (Persero) agreed to convert the Company’s trade payable for fuel purchase transactions for the period June 1, 2004 until June 30, 2006, of USD 76,484,911.64, equivalent to Rp 711,768,587,722, into a long-term loan. This loan will fall due on December 31, 2015 and has an interest rate of six-month LIBOR (London Inter Bank Offer Rate) + 1.75% per annum. Angkasa Pura II Based on agreement on dated May 27, 2009, PT Angkasa Pura II (Persero) agreed to convert the Company’s trade payable of USD 21,052,103.19, equivalent to Rp 195,910,872,304, into a long-term loan. This loan will fall due on December 30, 2015 and has interest rate of LIBOR + 0.9% per annum.

Angkasa Pura I Based on agreement dated May 27, 2009, PT Angkasa Pura I (Persero) agreed to convert the Company’s trade payable amounting to USD 8,872,465.91 equivalent to Rp 91,465,097,646, into a long-term loan. This loan will fall due on December 30, 2015 and has interest rate equivalent to the quarterly rate of Bank Indonesia Certificate + 0.9% per annum. Bank CIMB Niaga PT Mandira Erajasa Wahana (MEW), a subsidiary, obtained special investment loan from Bank CIMB Niaga which was used to finance new vehicles for operations, with terms of 3 to 4 years and bears interest ranging from 2.5% - 5% per annum above the interest rate of time deposit guaranteed by the government. The loan is secured by the related vehicles purchased, lease receivables and provisions for maintaining escrow accounts and Letters of Comfort from PT Aerowisata.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Bank Mandiri Syndication The Bank Mandiri Syndicated loan was extended until 2007 with interest rate based on average interest rate for 3-month or 6-month deposits in Rupiah + 1.5% (whichever is higher) in Bank Mandiri, Bank Internasional Indonesia and Bank Danamon. The loan is secured by the Company’s property and equipment, consisting of maintenance support facilities building, computer building and its facilities and medical center building. In October 2009, Bank Mandiri syndicated loans has been fully paid.

25. LEASE LIABILITIES The Company entered into lease transaction for the lease of aircraft Airbus type A-330 which were financed by Lloyd (ECA), with lease term of 1996 – 2016 (Note 24). The minimum lease payments based on the lease agreements are as follows:

Setara dengan/ Equivalent to Rp 931.307.140.056 3.562.342.900.300 471.187.854.062 4.964.837.894.418 430.644.044.275 4.534.193.850.143 Within one year Over one year but not longer than five years Over five years Total future lease payment Less finance charges in the future Present value of minimum lease payments Presented in consolidated balance sheets as: Current liabilities Noncurrent liabilities Total

Balance at beginning of year Provision during the year Amount utilised Amortized discount Foreign exchange differences Balance at end of year Presentation Current liabilities Noncurrent liabilities Total

28. POST-EMPLOYMENT BENEFITS OBLIGATION a. Post-employment Benefits Pension Plan The Company and PT Garuda Maintenance Facility Aero Asia (GMFAA), a subsidiary, established a defined contribution pension plan for all their permanent employees. The pension plan is managed by Dana Pensiun Garuda Indonesia (DPGA), whose deed of establishment was approved by the Minister of Finance of the Republic of Indonesia in his Decision Letter No. KEP-403/KM.17/1999 dated November 15, 1999. The pension fund contributions are equivalent to 7.5% of employees’ base salaries wherein 2% are assumed by the employees and the difference is assumed by the Company and its subsidiary.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

PT Abacus Distribution Systems Indonesia (ADSI), a subsidiary, established an insurance program covering post-retirement benefits for all qualified permanent employees. This program provides post-retirement benefits based on the participants latest salaries. This program is managed by PT Asuransi Jiwasraya (Persero). The program is funded by contributions from the respective subsidiary and its employees at 7.5% and 2.5%, respectively, of the employees' gross salaries.

PT Aerowisata, a subsidiary, established a defined benefit pension plan for all its permanent employees. The plan is managed by Dana Pensiun Pegawai Aerowisata. The pension fund is funded by contribution from PT Aerowisata and its employees at 10% and 5%, respectively, of the employees gross salaries. At retirement age, the employees will obtain benefit of 2.5% x working period x basic pension income. Contribution of the Company and its subsidiaries in 2009 and 2008 are as follows:
2008 Rp
26.379.194.439 8.570.037.329 34.949.231.768 The Company Subsidiaries Total

Defined Benefit Plan The Company also provides benefits to its qualifying employees in accordance with the Company’s policies based on Labor Law No. 13 Year 2003. The number of employees as of December 31, 2009 and 2008 entitled to the benefits are 10,827 and 11,632, respectively. No funding has been made to this defined benefit plan.

Other Long-term Benefits The Company provides long service awards to its employees who have already rendered 20 years of service in accordance with the Company’s policies. The number of employees at December 31, 2009 and 2008 entitled to the benefits are 10,827 employees and 11,632 employees, respectively. No funding has been made to this long term benefits.

Jumlah/ Total Rp 1.070.551.865.843 196.990.877.391 2.154.185.238 (140.460.700.886) 1.129.236.227.586 Balance at beginning of year Expense for the year Adjustment related to mutation Payments of benefits Balance at end of year

In 2009, the Company offered second career program to certain employees. The difference between the total benefits paid and the carrying amounts of the employee benefit obligations attributed to the related employees, was recorded as other expenses amounting to Rp 203,098,145,482.

29. CONVERTIBLE BONDS As a result of the Company's loan restructuring in 2001 (Note 24), the Company issued convertible bonds to PT Bank Mandiri (Persero) Tbk, with nominal value of Rp 1 million per bond, maturity period of 5 years and interest rate at 4% per annum with payment on quarterly basis. The holders of the convertible bonds and the Company have the right to convert all such bonds into the Company's shares with par value of Rp 1 million per share. The conversion right can be exercised anytime from the effective date until the maturity date. The convertible bonds are not transferable and at anytime are subordinated into any other form of the Company’s loan.

In 2006, the shareholders agreed on extension of the conversion of the bonds up to two years since the due date, or up to November 2, 2008.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

In December 2009, Bank Mandiri and the Company have agreed to restructure and settle the mandatory convertible bond as follows: 1. 2. Cash payment of 5% of the principal or Rp 50,940,000,000. The remaining 95% of the principal or Rp 967,869,000,000 is converted into the Company’s shares (Note 31).

Based on Minutes of the General Meeting of Shareholders regarding the change in the Company’s Articles of Association as stated in Deed No. 51 dated August 7, 2008 of Sutjipto, S.H., notary in Jakarta, the Shareholders have approved the increase in the Company’s authorized capital from Rp 11,540,076,000,000 to Rp 15 trillion and to increase the Company’s issued and paid up capital from Rp 7,152,629,000,000 to Rp 8,152,629,000,000 derived from the conversion of Government Equity participation amounting to Rp 1 trillion. Based on the circular decision of the Shareholders dated December 28, 2009 as stated in Deed No. 274 dated December 30, 2009 of Aulia Taufani, S.H., substitute of Sutjipto, S.H., notary in Jakarta, the shareholders have approved among others:

1.

The restructuring of Mandatory Convertible Bond with cash payment of 5% of the principal and 95% is converted into the Company’s shares. the issuance of 967,869 shares with a nominal value of Rp 1,000,000 per share, in connection with the conversion of the Convertible Bonds of Bank Mandiri.

The change in the Company’s Articles of Association in relation to the increase in the Company’s issued and paid-up capital has been accepted and recorded in the Legal Entity Administration System database of the Department of Law and Human Rights of the Republic of Indonesia on December 31, 2009. 32. ADDITIONAL PAID-IN CAPITAL This account represents the Government Equity Participation (GEP) intended for the increase of paid-up capital of the Company, as follows:
2008 Rp 755.090 Capital reserve GEP on jet engine test cell based on the Decision Letter of Ministry of Finance of the Republic of Indonesia No. S-124/MK.016/1998 GEP on 2 boeing 747-400 aircrafts and 7 boeing 737-400 aircrafts based on Government Regulation No. 70/2000 Conversion into paid-up capital Transfer of the Company's receivables pertaining to transfer of 17 F-28/4000 aircrafts to PT Merpati Nusantara Airlines Total

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

a.

Based on Government Regulation No. 70 dated August 21, 2000, the Government has agreed to increase the Government Equity Participation by Rp 2,149,274,104,196, however since the Company has not yet increased its authorized capital, the Government Equity Participation was presented as additional paid-up capital. In 2001, the Company held a General Meeting of Shareholder in order to increase its authorized, issued and paid-up capital. This was approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his Decision Letter No. C-07276 HT.01.04.TH 2001 dated September 4, 2001. Accordingly, the additional paid-in capital was reclassified to paid-up capital which amounted to Rp 1,986,364,000,000.

b.

On December 28, 2006, the Government issued Government Regulation (PP) No. 46 of 2006, which approved increasing the Government Equity Participation (GEP) to Rp 500 billion. On December 10, 2007, the Government issued Government Regulation (PP) No. 69 of 2007, which approved increasing the GEP to Rp 1 trillion. The Government through the Department of Finance has transferred the respective funds of Rp 1 trillion and have been received on March 26, 2007 and December 28, 2007. Based on the Company’s Articles of Association which is stipulated in Deed No. 51 dated August 7, 2008 of Notary Sutjipto, S.H., the Government Equity Participation has been converted into share capital.

Income before tax per consolidated statements of income Extraordinary gain Income before tax of subsidiaries Eliminated intercompany transactions Income before tax of the Company Temporary differences:

Payment of lease liabilities Income subjected to final tax Expenses that are not deductible for tax purposes Income that are not taxable for tax purposes Equity in net income of associates Sub total Taxable income (fiscal loss) before fiscal loss carryforward Fiscal loss carryforward Correction based on tax assessment letter Accumulated fiscal loss

Based on law No. 36/2008, the amendment of tax law No. 7/1983 on income taxes, the new corporate tax rate is set at flat rate of 28% effective January 1, 2009 and 25% effective from January 1, 2010. Accordingly, deferred tax assets and liabilities have been adjusted to the enacted tax rates that are expected to apply to the period when the asset is realized or liability is settled.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

A reconciliation between the total taxable income and the amounts computed by applying the effective tax rate to income before income tax is as follows:
2008 (Disajikan kembali Catatan 51/ As restated Note 51) Rp

Payment of lease liabilities Nondeductible expenses for tax purposes Income subject to final tax Income that are not taxable for tax purposes Equity in net income of subsidiaries Unrecognized temporary differences Tax benefit of the Company Change in income tax rates Tax expense of the subsidiaries Total Tax Benefit(Expense)

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

44. NATURE AND TRANSACTIONS WITH RELATED PARTIES Nature of Relationships The Company has ownership interests in PT Gapura Angkasa (an associate), and Abacus International Pte., Ltd. Lufthansa System Group GMBP is one of shareholder of PT Aerosystem Indonesia (formerly PT Lufthansa System Indonesia) in 2008. Transactions with Related Parties The Company entered into certain transactions with related parties including, among others, the following: a. 87.73 % and 85.84% of a subsidiary's revenues (PT Abacus Distribution Systems Indonesia) in 2009 and 2008 are derived from Abacus International Pte., Ltd. The Company has outstanding trade receivables from related parties (Note 6) and trade payables to related parties (Note 19). Revenue, receivables from and payables to related parties are as follows:
2008 Piutang usaha/ Trade accounts receivable Rp'000 11.078.295 3.363.428 14.441.722

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

45. DERIVATIVE FINANCIAL INSTRUMENTS Year 2009 On June 10, 2009, the Company entered into Commodity call option for hajj flights’ fuel with Morgan Stanley Capital Group Inc., New York, whereby the Company has agreed to perform hedging activity using “Bought Asian Call Option” instrument, with the total notional amount of 610,000 barrels maturing on various expiry dates over a 6 month period from June 2009 to December 2009. The call option has been set at USD/bbl rate of 75 as the “call” strike rate.

The objective of the hedge is to mitigate cash flow fluctuations arising from future payments of highly probable forecast foreign currency (USD) denominated expenditures due to the Company’s exposure to adverse movements in aviation fuel purchase price for hajj flights. The hedged item is the highly probable forecast cash outflows denominated in USD. The USD denominated expenditures collectively represents a homogeneous risk. Year 2008 The Company is exposed to price risk due to changes in the foreign currency fluctuation and future price changes of aircraft leased payment and jet fuel purchase. As a result, the Company anticipates this situation by entering into the following forward foreign exchange contracts:

Security Deposits The Company is required to pay security deposits that will serve as guarantee for the payment of the Company’s obligations. As of December 31, 2009 and 2008, the balance of the security deposits amounted to USD 64,854,481 or equivalent to Rp 609,632,121,118 and USD 44,237,232 or equivalent to Rp 484,397,686,129, respectively (Note 11). Maintenance Reserve Funds Based on operating lease arrangements for aircrafts, the Company is required to pay a maintenance and repair reserve funds for the leased aircraft to the lessor (Note 11). Maintenance reserve funds are based on the use of the aircraft during the lease term consisting of reserves funds for airframe structure maintenance, engine performance restoration maintenance, engine life limited parts maintenance, landing gear maintenance and Auxiliary Power Unit (APU) maintenance. During the lease term, the Company is obliged, to maintain and repair the airframes, engines, APU and all the parts in accordance with agreed standard. The maintenance and repair work on the airframes, engines and other part, or engines will be regularly performed by authorized maintenance repair and overhaul companies (MRO). Based on the lease agreement, the Company will be entitled to its reimbursement of applicable maintenance and repair reserve funds after the work is completed and the airframe, engine, landing gear or APU are released by the workshop company, by submitting invoices and proper documentation within certain days after the completion of the work.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

Up to the termination date, the Company shall have the obligation to pay contribution into the reserve funds, and any outstanding reimbursable expenses shall be reviewed and disbursed, provided no default occurred. Depending on the specific agreements, the lessor may or may not retain the remaining balance of the reserve funds. 2. Non Aircraft Operating Lease a. GMFAA entered into agreement with PT Jakadara Aircraft Services in relation to provision of material handling vehicle to GMFAA. The term of this agreement is until July 31, 2010. On January 25, 2008, GMFAA entered into Land Utilization and Business Concession Agreements with PT (Persero) Angkasa Pura II in relation to land utilization measuring approximately 900,000 square meters used for aircraft maintenance business activities in Soekarno-Hatta Airport, Cengkareng, Tangerang. The term of this agreement is effective until December 31, 2011, with compensation and concession based on agreed tariffs. GMFAA is obliged to provide bank guarantee issued by general bank to secure the payment of such compensation. The term of such guarantee is 1 year and renewable annually until the expiration of the agreement.

b.

b.

c.

c.

GMFAA also entered into operating lease agreements of operational equipment, internet connection, and others with several parties. The Company entered into an agreement for utilization of 6,246 square meters of land at the Soekarno-Hatta Airport with PT Angkasa Pura II, for 30-year period until September 30, 2021. The land is used for the purpose of cargo office building. The compensation for the use of the land is Rp 800 per square meter per month or a total of Rp 1,798,848,000, which is subject for review every 5 years. A deposit of 10% or Rp 179,884,800 was also paid. Payment of Rp 53,965,440 is made annually.

d.

d.

At the expiration of the agreement, the Company will return the land and all the facilities to PT Angkasa Pura II.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued) The Company also entered into an agreement with PT Angkasa Pura II for the use of another parcel of land with an area of 164,742 square meters at the SoekarnoHatta Airport, for a period of 20 years until December 31, 2011. The Company constructed on such land the office building. The operating lease agreements contain option to renew the lease term. The Company does not have an option to purchase the lease asset at the expiry of the lease term. The lease agreements include certain conditions that may cause the leases to be terminated prior to the expiry of the lease terms. Total other lease commitments is as follows:
2008 Rp 96.846.509.252 234.389.687.068 266.398.030.600 597.634.226.920 Within one year Longer than one year but not longer than five years Over five year Total

47. COMMITMENTS AND CONTINGENCIES a. Based on Purchase Agreement No. 1938 dated June 4, 1996, which had been amended several times, most recently by Supplemental Agreement No.4 dated December 29, 2005, the Company entered into a contract to purchase 6 Boeing 777-200ER with basic price of USD 198,192,610. The price of the aircrafts will be determined at the time of delivery by calculating the price adjustments in accordance with the agreement. Delivery was scheduled within the period of June 2010 up to August 2011. However, based on confirmation from the Boeing Company No. 6-1176-DJH - 1049R-1, dated March 30, 2007, the purchase of 6 Boeing 777-200ER was replaced with purchase of 10 Boeing 787 and will be delivered April 2014 up to July 2015. The confirmation is proceeded by the Boeing’s offering to renew the Purchase Agreement No. 1938 into purchase of 10 B 777-200ER/300ER/200LR.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

In response to the offering, the Company plans to increase the number of units purchased from 6 aircrafts B777-200 into 10 aircrafts B 777300ER by submitting Supplemental Agreement No. 5 to Purchase Agreement No. 1938. Delivery of the aircrafts is scheduled within the period of July 2010 up to July 2013. The Company also entered into Purchase Agreement No. 2158 dated June 19, 1998 for the purchase of 18 Boeing 737-700, which had been amended several times, most recently by Supplemental Agreement No. 4 dated May 31, 2007, whereby the Company increased the number of units purchased into 25 Boeing 737800 aircrafts with basic price of USD 72,364,900. The price of the aircraft will be determined at the time of delivery by calculating the price adjustments in accordance with the agreement. Delivery of the aircrafts is within the period of June 2009 up to May 2012. In 2009, the Company entered into a sale and leaseback with DAE and MACP for 11 aircraft. The selling price is determined at the time of arrival of aircraft. As of the issuance date of the consolidated financial statements, the Company has received 5 aircrafts. b. On November 4, 1989, the Company entered into a Purchase Agreement with Airbus for the purchase and delivery of 9 Airbus A-330 aircrafts. The Company has received 6 of the aircrafts but has sought rolling extension for the delivery of the final 3 aircrafts, in which based on a Side Letter dated December 21, 1995 the final delivery of 3 aircrafts was scheduled in July 1998, August 1998, and January 1999. These deliveries have not taken place because the Company has not reached any subsequent formal agreement with Airbus in relation to its obligation under the Purchase Agreement for the delivery of the remaining 3 Airbus A-330 aircrafts.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

c.

Component Pooling Agreement with Technics Switzerland ("SR Technics")

SR

The Company entered into a component pooling agreement for A-330 with SR Technics. As a participant to the A-330 pool, the Company is allowed to use A-330 components which are available in the main storage at Zurich. The Company also has the right to ask SR Technics to provide temporary services, field assistance team or other special services, as well as technical and administrative training in the Company's maintenance facility in Jakarta or in any other line stations of SR Technics.

This agreement has been extended several times with the latest amendment No. DS/PERJ/AMEND-IV/DE-3076/99/2007 dated July 10, 2007. Thereafter, each party may cancel the agreement by giving to the other party 6 months prior notice. The corresponding pooling expense is determined according to the tariff applied to the components used.

d.

On August 6, 2004, the Company and PT World Simulator Technology (WST) entered into Rental Agreement on Area for Simulator and Support Facilities No. VZ/PERJ/3012/2004 whereby the Company agreed to rent its simulator area and support facilities located at SBU Garuda Indonesia Training Centre to be used as space for Full Flight Simulator B 737200 Level D Six Axis owned by WST.

As the Company is considered not in compliance with the agreement, on December 19, 2006, WST filed with the Central Jakarta District Court a lawsuit against the Company for breaking the contract and for committing illegal act.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

On May 30, 2007, the Central Jakarta District Court issued a verdict No. 397/PDT.G/2006/PN.JKT.PST accepting claim of WST and ordered the Company to pay to WST the amount of USD 1,380,000 and Rp 1,500,000,000. On June 4, 2008, the High Court of DKI Jakarta decided to upheld the verdict of the District Court of Central Jakarta and order the Company to pay USD 1,984,500 and Rp 1,590,000,000.

The Company filed a cessation No. 100/SRT.PDT.KAS/2008/PN.KKT.PST dated November 7, 2008. As of the issuance of the consolidated financial statements, the Company is still waiting for the ruling from the Supreme Court of the Republic of Indonesia. e. On December 22, 2000, the Company and PT Magnus Indonesia (Magnus) entered into Consultant Agreement No. DS/PRJ/DZ3345/2000 as amended by Amendment I for Consultant Agreement No. DS/PRRJ/ AMAND.I/DZ-3345/2000/2004 dated April 15, 2004. During the contract period, Magnus breached the contract, thus the Company filed a lawsuit on March 3, 2006 for a total claim of USD 6,160,700. On June 12, 2006, Magnus filed a lawsuit against the Company for illegal act as the Company cancelled the agreement and did not return the deposit for work performance. The amount of claim consists of material claim to the Company of USD 2,813,111 and immaterial claim to the Company and PT Asuransi Jasa Indonesia of USD 100,000,000.

On November 23, 2006, the Central Jakarta District Court has issued a verdict No. 41/ SRT.PDT.KAS/2008/PN.JKT.PST accepting the claim of Magnus and ordered the Company to pay to Magnus the claim of USD 2,813,111. On December 12, 2007, The High Court of DKI Jakarta decided to upheld the verdict of the Central Jakarta District Court.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

The Company filed appeal No. 02/PDT.G/2006/ PNJKT.PST on May 19, 2008. On March 10, 2010, the Supreme Court of the Republic of Indonesia has issued a verdict No. 1995 K/Pdt/2008 accepting the Company’s appeal and ordered PT Magnus Indonesia to pay to the Company the claim of USD 6,160,700.

f.

On December 17, 2007, the Company has received Notice to Furnish Information and Produce Document from Australian Competition and Commerce Commission (“ACCC”) related to allegation of price fixing cartel on Cargo Fuel Surcharge. Currently, the case is still under examination by Federal Court of Australia. On October 5, 2009, the Company has received Notice of Proceeding (Commercial List) from the High Court of New Zealand related to allegations of price fixing cartel on Cargo Fuel Surcharge, filed by New Zealand Commerce Commission (NZCC), New Zealand. Currently, the case is still under examination by the High Court of New Zealand. On November 16, 2009, the Company has received Notice of Advance Proceeding (Commercial List) from The Supervision of Business Competition Committee (“KPPU”) related to allegations of price fixing cartel on Fuel Surcharge of Domestic tickets. As of the issuance date of the consolidated financial statements, the case is still under examination by KPPU.

49. SEGMENT INFORMATION Based on the financial information used by the management in evaluating segment performance and determining resource allocation, the Company and its Subsidiaries use business segment as the primary segment and geographical segment as the secondary segment. All inter-segment transactions have been eliminated. Consolidated information based on business segment as primary segment is as follows:
2009 Jumlah sebelum Operasi lain-lain/ Other operation Rp Total before elimination Rp eliminasi/ Eliminasi/ Rp Jumlah/ Total Rp

50. THE COMPANY’S GOING CONCERN In 2009, the Company has settled its syndicated loan from Bank Mandiri, the Company has also converted the convertible bonds into company shares. Additionally the Company has also submitted a proposal for loan restructuring to other creditors. Following the submission, the Company proposed to, among others, reschedule the terms of debt payment to all respective outstanding creditors. As of the issuance date of the consolidated financial statements, the restructuring is still in progress.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

To increase the financial performance and position in the near future, the Company has taken the following steps and plans: a. b. c. d. e. f. g. h. Financial restructuring Balance sheet restructuring Organization restructuring Flight reliability and safety Flight convenience Improve quality services Marketing concept and capability Image recovery

51. RESTATEMENTS OF 2008 CONSOLIDATED FINANCIAL STATEMENTS In 2009, the Company made some adjustments to the 2008 financial statements to conform with accounting principles generally accepted in Indonesia and accounting practice for airline industry thru reference to AICPA Airline Industry Guide. a. Changed the accounting policy for cost of major airframe inspection, engine overhauls for owned aircraft, and leased aircraft from accrual method to deferral method and revised the consolidated financial statements in accordance with SFAS No. 16 (Revised 2007) and FASB Staff Position (FSP) AUG AIR1”Accounting for Planned Major Maintenance Activities” issued on September 8, 2006. Recognition of contractual liability on supplemental lease when airframe component no longer met the required minimum performance as stated in the agreement, amounting to the estimated minimum cost for return condition in accordance with SFAS No. 57 “Estimated Liabilities, Contingent Liabilities and Assets”. Moveover, payment for airframe heavy maintenance was conducted through reimbursement mechanism. With this term the supplemental rent should be recognized as asset (deposits or prepayments) in accordance with SFAS No. 30 (Revised 2007) “Leases”.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

c.

Recognition of long term benefits related to Preparation for Retirement Period program managed by Yayasan Kesehatan Garuda (Yankesga) where the benefit is determined by service level when the employees retire in accordance with SFAS No. 24 (Revised 2004) “Employee Benefits”. Recognition of customer loyalty program in accordance with SFAS No. 57 “Estimated Liabilities, Contingent Liabilities and Assets”. Changed the classification of building and improvement, machineries and installation in PT Bina Inti Dinamika, subsidiary of PT Aerowisata, into Build Operate Transfer (BOT) and changed the accounting policy for BOT asset from revaluation model into cost model. Changed the reporting entity in PT Aerowisata, subsidiary, wherein the subsidiary has obtained as new data for the financial statements of Garuda Orient Holidays Korea Co, Ltd, subsidiary of PT Aerowisata as of December 31, 2008, thus the accounting for the investment in subsidiary has changed from cost method into consolidation method.

PT. GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 AND FOR YEARS THEN ENDED (Continued)

52. SUBSEQUENT EVENTS a. On January 21, 2010, the Company repurchased its FRN with face value of USD 40 million and Rp 37 billion for purchase price of USD 22 million and Rp 23 billion, respectively. Based on amendment and restatement trust deed dated January 21, 2010, the remaining outstanding FRN amounting USD 75 million and Rp 108 billion were restructured and will fall due in 2018. In February, March, and April 2010, 4 (four) Boeing 737-800 aircrafts that are subject to sale and leaseback agreements (Note 47), have been delivered. The agreed purchase price amounted to USD 177,627,657 and will be leased for 12 years. On April 8, 2010, the Company has received a Notice of Preliminary Proceeding No. 460/KPPU-TP-PP/2010 from The Supervision of Business Competition Committee (“KPPU”) related to the allegation of business discrimination on extension approval for give away hajj for 2009/2010 and 2010/2011. As of the issuance date of the consolidated statements, the case is still under examination by the KPPU.

The financial information of the Parent Company only presents balance sheets, statements of income, statements of change in equity and statements of cash flows information in which investment in subsidiaries were accounted for using the equity method. This supplementary information is presented on pages 87 to 91. 54. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements on pages 3 to 86 were approved by the Company’s Directors and authorized for issue on April 30, 2010. ******

PT GARUDA INDONESIA (PERSERO) AND ITS SUBSIDIARIES SUPPLEMENTARY INFORMATION STATEMENTS OF CASH FLOWS - THE PARENT COMPANY ONLY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 *) 2008 Rp CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Income taxes paid Interest paid Net Cash Generated from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Dividend received Proceeds from sale of property and equipment Other receipt from sale of land and building Refund of advance payments for purchase of aircraft Receipt of aircraft maintenance reimbursements Other receipt from investing activities Advance payments for aircraft Advance payments for fixed assets Payments for aircraft maintenance fund Payments for aircraft maintenance asset Acquisition of property and equipment Payments of security deposits - net Investments in shares of stock Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term liabilities Payment for other financing activities Net Cash Used in Financing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT END OF THE YEAR
NONCASH INVESTING AND FINANCING ACTIVITIES Conversion of convertible bonds into paid-up capital stock Increase (decrease) of fixed asset through revaluation surplus Increase in fixed asset through estimated liabilities for aircraft return and maintenance cost Conversion from accounts payable to long-term loans

Appointed as President Commissioner since June 2007. Hadiyanto is also active as member of the Board of Directors of Indonesia Eximbank and Director General of State Assets at the Department of Finance. Previously, President Commissioner of Bank Ekspor Indonesia, Commissiioner of PT Bahana Pembiayaan Usaha Indonesia, Commissioner of Bank BTPN, Commissioner of Tugu Re, member of Supervisory Board of Perum Perhutani, Head of Legal Division – Department of Finance, Alternate Executive Director of World Bank in Washington DC, Head of Legal and Public Relations Division – Department of Finance. Hadiyanto was born on October 10, 1962, graduated with a Bachelor of Law from Universitas Padjadjaran. He obtained a certificate of International Tax Program from Harvard University, USA and received an LLM from Harvard University Law School, USA.

Appointed as Commissioner since June 2007 after serving as President Commissioners since 2005, and President & CEO of the Company from 1998 to 2002. Previously among others served as Secretary of the Minister of the State Owned Enterprises, President Director of Bank Duta, President Commissioner of Bank Bukopin, Commissioner of PT Amro Duta Leasing and member of the Board of Directors of the Asean Finance Corporation in Singapore. Abdulgani was born on March 14, 1943, obtained his degree in Economics from Universitas Indonesia and his Master degree in Economics from the University of Colorado at Boulder, USA.

Appointed as Commissioner since 2007. Presently, he serves concurrently as Chairman of Indonesian Institute of Corporate Governance (IICG), Chairman & CEO of ACeS and founder of PT Pasifik Satelit Nusantara. Previously, Adi Rahman Adiwoso was Director of Marketing of PT Satelit Palapa Indonesia, Board Member and COO of Orion Satellite Asia Pacific in Washington DC., Managing Director of PT Rajasa Hazanah Perkasa and active in Rasikomp Nusantara and Hughes Aircraft. Adi Rahman Adiwoso was born on July 26, 1953, obtained a Bachelor of Science (BSc) in Aeronautical and Astronautical Engineering from Purdue University and received a Master of Science from California Institute of Technology in the same field.

Served as Commissioner since June 2007. Concurrently, he is also the President Commissioner of PT Perusahaan Pengelola Aset (Persero) and Deputy in Mining, Strategic Industry, Energy and Telecommunication of the Ministry of State Owned Enterprises. Previously, he was Commissioner of PT PGN (Tbk), Commissioner of PT Petrokimia Gresik, Chairman of Working Group of the Board of Commissioners of Pertamina (DKPP), Supervisory Board of Fatmawati Hospital, President Commissioner of PT Geo Dipa Energi, Alternate Governor of OPEC Fund as well as Lecturer at Universitas Indo Nusa Esa Unggul, Director of Non Tax Revenue and General Services, Deputy of Coordinating Minister of Macro Economy & Finance. Sahala Lumban Gaol was born on July 7, 1952, graduated with a Bachelor of Husbandry from Bogor Institute of Agriculture, completed his Masters studies in Economy from the University of Illinois, USA and received a Doctor of Philosophy in Economy with specializations in Economics, Finance, Monetary Economics, International Economics and Econometrics from Iowa State University, USA.

Served as Commissioner since 2007. Currently, he holds a position as Advisor to the Ministry of Transportation. Previously, he was a Secretary General of Department of Transportation, Directorate Geral of Rail Transportation, Deputy Minister of Research and Technology in Utilization and Socialization of Sciences and Technology, Commissioner of PT PLN Batam, Deputy of Administration & Planning of Batam Authority, Commissioner of PT Aditirta Batam, Assistant to Chairman in Monitoring & Evaluation of Development – BP3 Natuna, Head of Planning Division – BPP Teknologi, Head of General Division – HOH Bureau, Head of Pavilion of Indonesia (Expo Sevilla Spanyol), Project Leader for Exhibition of Tourism and Industrial Technology at BPP Teknologi, Site Engineer at PT Pembangunan Perumahan (Persero). Wendy Aritenang was born on December 15, 1954, earned a Bachelor of Civil Engineering at the Institut Teknologi Bandung in 1979. Master of Science & Diploma (DIC) degree in 1986 and Doctorate in 1989 from the University of London at Imperial College of Science & Technology for Structure (Civil Engineering).

Appointed since March 2005. Previously assumed various key managerial positions at Citibank NA., Jakarta, Jan Darmadi Group, Niaga Factoring Corporations and Niaga Finance in Hong Kong. He first joined Garuda Indonesia in 1998 as EVP Finance, overlooking the Company’s entre financial restructuring process, Emirsyah Satar left the Company in 2003 and was appointed as Deputy CEO of Bank Danamon, before rejoining Garuda Indonesia as President & CEO. At present, Emirsyah Satar also serves as INACA (Indonesia National Air Carriers Association) and Vice President of the Indonesia Chamber of Commerce and Industry for Corporate Management Development and Legal Corporate. Emirsyah Satar received several awards, such as Marketer of the Year Indonesia 2009 from MarkPlus Inc., The Best of the Best CEO 2009 from Warta Ekonomi Magazine. Emirsyah Satar was born on June 28, 1959, holds a degree in Accounting from Universitas Indonesia and accomplished diploma programs at Sorbonne University in Paris.

Appointed since March 2005. Has held various managerial positions with Garuda Indonesia, including VP Business Support, VP Controlling, VP of Finance Administration, VP of Revenue and Financial Accounting. Member of the Marketing Revitalization team, Member of the Supervisory Board of Kokarga and Director of Finance Report Consolidation Section. Achirina was named as one of 50 Most Powerful Woman in 2009 by SWA Magazine. Achirina was born on December 17, 1957, earned her Economic degree in Accounting from Universitas Padjadjaran, Bandung.

Appointed since March 2005. Throughout his career in Garuda Indonesia, he had held various positions, including as General Manager for Germany, VP Revenue Management, General Manager for Australia, General Manager for Switzerland, General Manager for Brunei Darussalam and General Manager for Scandinavia & Finland. Agus Priyanto was born on August 15, 1958, earned his degree in Economics from Universitas Jenderal Sudirman, Puwokerto. He attended various trainings and courses held by institutions related to aviation in Indonesia and abroad, including a variety of management trainings in the USA.

Appointed since March 2005. Has held various positions throughout his career in Garuda Indonesia, including as President of the Association of Garuda Pilots also as Pilot Captain of Airbus 330, Section Head of Line Operations DC-10. Route Check Pilot DC-10. Simulator Instructor DC-10. Route Instructor DC-10, Line Operations Manager DC-10. WIP (Presidential) Pilot and Instructor and Government Check Pilot. Ari Sapari was born on September 29, 1955, received Commercial Pilot licence from Oxford Air Training School, England.

Served since November 2007. Previously, he served in a number of managerial positions, including Chief Financial Officer of PT General Motor Indonesia, Director of Finance of PT Reckitt Benckiser Indonesia and various Managerial position especially in Finance sector at PT BAT Indonesia. In 2009, Eddy Porwanto was awarded as “Indonesia Future Business Leader” from SWA Magazine. Eddy Porwanto was born on June 14, 1968, obtained Bachelor of Science in Accounting from Lewis & Clark College, Portland, Oregon, USA and a Master of Business Administration from the University of Illinois in Urbana, Campaign USA.

Served since November 2007. Previously, he was the CEO of PT Garuda Maintenance Facility AeroAsia (GMFAA) and was largely involved in the establishment of this company, serving among others Director, Executive Vice President and Head of Strategic Business Unit. Previously, he was the Vice President of Workshop Division Garuda Indonesia. Prior to joining Garuda Indonesia, he had experience as the Head of construction projects in oil and gas. Hadinoto Soedigno was born on January 5, 1953, graduated from Institut Teknologi Bandung in Mechanical Engineering and obtained a Magister Management degree from Universitas Indonesia.

Etty Retno Wulandari has been a member of the Audit Committee since December 1, 2008, succeeding Ahmadi Hadibroto. Presently she is the Director of Accounting Standard and Disclosure Bureau of Bapepam-LK. Etty Retno Wulandari was born on August 24, 1962, obtained her Accounting Degree from STAN, an MBA in Corporate Accounting and Finance from the University of Rochester, NY, USA, and a PhD in Accounting from Nanyang Technological University, Singapore.

Adi Dharmanto has been a member of the Audit Committee since May 1, 2009. Presently, he works for PT Nura Kapital and is responsible for Business Development, Corporate Restructuring, Equity Financing & Project Financing. Adi Dharmanto was born on September 30, 1962, obtained a degree in Civil Engineering from Institut Teknologi Sepuluh Nopember Surabaya (ITS) in 1987.

Baitul Ihwan has been a member of the Corporate Governance Policy Committee since November 2008. Presently he is the Legal Division Head at the Railway Directorate General. His previous positions include Section Head of Driver Instructions; Head of Safety Sub-Directorate; Traffic & Road Directorate; Directorate General for Land Transportation; Passenger Transportation Section Head, Land Transportation Directorate; Cargo Transportation Section Head, Public Transportation Sub-Directorate, Traffic & Road Directorate, Land Transportation Directorate General. Baitul Ihwan was born on March 17, 1965, obtained his Bachelor of Law in Semarang and Magister in Transportation Law from De Droit University in France.

G. Suprayitno has been a member of the Corporate Governance Policy Committee since November 2008. Presently he is a consultant for the GCG Clinic at the Indonesian Chamber of Commerce and Industry (Kadin), Executive Secretary of DPPK Program Implementation, and a member of the Remuneration and Nomination Committee and Risk Management Committee of PT Semen Baturaja. Previously he served as the consulting Team Head for HR Development at PT IGLAS, Head of the Development Team for competency and performance based Academic and Non-Academic HR Management System at ITB, and a member of the consulting team at PT Indonesia Power. G. Suprayitno was born on February 14, 1956, obtained his bachelor’s degree in Agriculture Mechanization from IPB, Magister in Management from Labora Management School, and Doctorate in Technical and Industry Management from ITB.

Asril Fitri Syamas has been a member of the Risk Policy Committee since 2008. Presently he is a Researcher at the Directorate of Industrial Infrastructure, Deputy for Industrial Analysis, BPPT; and a member/Chairman of the Board of Directors for IPTN North America Inc. Seattle, USA. Previously he was the Chief of Team Selection, Monitoring and Evaluation for the Research Program in Industrial Technology and Engineering Development; Commissioner of PT IPTN; Assistant to the President Director of PT BPIS; Commissioner/President Commissioner of PT Nusantara System International; Senior Executive Vice President (Director of Finance) of PT IPTN; President Commissioner of IPTN Europe Gmbh, Hamburg, Germany; Vice President of Finance for PT IPTN; seconded to the Coordinating Ministry of Economic and Finance as Assistant to the Deputy Ministry of Industry, Mining and Energy. In 2009, he received Certified Risk Management Professional by Lembaga Sertifikasi Profesi Manajemen Risiko and Chairman of Asosiasi Inkubator Bisnis Indonesia (AIBI). Asril Fitri Syamas was born on April 30, 1957, obtained his bachelor’s degree in Electrical Engineering from the University of Indonesia and Technological Economics from University of Stirling, United Kingdom.

Lily Rosilawaty Sihombing, has been a member of the Risk Policy Committee since 2008. Presently she is the Deputy Senior Manager of PT Perusahaan Pengelola Aset (PPA). She was seconded from PT PPA to the Secretariat for the Indonesian Minister of Finance; Manager of PT PPA, Manager of IBRA, Operations Group of ASPAC Bank, National Committee of Asia APEC, Marketing Executive for Cakrawala Tours & Travel. Lily Rosilawaty Sihombing was born on February 6, 1971, obtained an Accounting Diploma from Perbanas University, a bachelor’s degree in Accounting from YAI University and an MBA from La Trobe University, Melbourne.

Sri Mulyati has served as VP Internal Audit since May 2008. Prior to joining Garuda Indonesia, she worked at the Financial Supervisory Agency from 1984, ending her term there as the Section Head of Foreign Oil Contractor Supervision. Sri Mulyati was born on June 2, 1956, graduated from the Faculty of Economics at Airlangga University in Surabaya in 1982 and has attended various courses and training programs in accounting and auditing by both local and foreign institutions.

Served as a Corporate Secretary since October 2009. Previously, she was a Corporate Secretary and Head of Corporate Legal & Governance Management of PT Excelcomindo Pratama Tbk (previously PT Excelcomindo Pratama Tbk) from 2005. Starting her carreer as an Associate and Senior Associate at Hadiputranto, Hadinoto & Partners and Lubis Ganie Surowidjojo Law Firm, she was heavily involved in legal aspects of several transactions especially capital market transactions.

Ike Andriani was born on July 9, 1971, obtained her Law degree from Parahyangan Catholic University, Bandung, 1994.

Pujobroto was appointed as Vice President Corporate Communication of PT Garuda Indonesia (Persero) since 2009. Previously he served as Vice President Corporate Secretary from 2007, and various positions at Garuda Indonesia from 1988 to 1998. Prior to joining Garuda Indonesia, Pujobroto worked at Indo-PR, a public relations consultant. Pujobroto was born on September 1958, completed his studies and was awarded a Master of Arts in Public Relations from Pittsburg State University, USA and obtained his bachelor degree from Faculty of Social and Political Studies, University of Indonesia in 1987. Attended a special program at “Economic Institute”, Boulder, Colorado, USA, 1991.